Correlation Between Bursa Cimento and MEGA METAL

Can any of the company-specific risk be diversified away by investing in both Bursa Cimento and MEGA METAL at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Bursa Cimento and MEGA METAL into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Bursa Cimento Fabrikasi and MEGA METAL, you can compare the effects of market volatilities on Bursa Cimento and MEGA METAL and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Bursa Cimento with a short position of MEGA METAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bursa Cimento and MEGA METAL.

Diversification Opportunities for Bursa Cimento and MEGA METAL

0.43

Correlation Coefficient

Bursa Cimento  MEGA METAL

Very weak diversification

The 3 months correlation between Bursa and MEGA is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Bursa Cimento Fabrikasi and MEGA METAL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MEGA METAL and Bursa Cimento is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Bursa Cimento Fabrikasi are associated (or correlated) with MEGA METAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MEGA METAL has no effect on the direction of Bursa Cimento i.e., Bursa Cimento and MEGA METAL go up and down completely randomly.

Pair Corralation between Bursa Cimento and MEGA METAL

Assuming the 90 days trading horizon Bursa Cimento Fabrikasi is expected to generate 1.34 times more return on investment than MEGA METAL. However, Bursa Cimento is 1.34 times more volatile than MEGA METAL. It trades about 0.26 of its potential returns per unit of risk. MEGA METAL is currently generating about -0.01 per unit of risk. If you would invest  701.00  in Bursa Cimento Fabrikasi on October 22, 2024 and sell it today you would earn a total of  207.00  from holding Bursa Cimento Fabrikasi or generate 29.53% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Bursa Cimento Fabrikasi  vs.  MEGA METAL

Bursa Cimento Fabrikasi

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Bursa Cimento Fabrikasi are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent forward indicators, Bursa Cimento demonstrated solid returns over the last few months and may actually be approaching a breakup point.

MEGA METAL

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in MEGA METAL are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong forward indicators, MEGA METAL is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Bursa Cimento and MEGA METAL

The main advantage of trading using opposite Bursa Cimento and MEGA METAL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bursa Cimento position performs unexpectedly, MEGA METAL can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in MEGA METAL will offset losses from the drop in MEGA METAL's long position.

The idea behind Bursa Cimento Fabrikasi and MEGA METAL pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.