Correlation Between Capital Financial and Medikaloka Hermina

Can any of the company-specific risk be diversified away by investing in both Capital Financial and Medikaloka Hermina 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 Capital Financial and Medikaloka Hermina into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Capital Financial Indonesia and Medikaloka Hermina PT, you can compare the effects of market volatilities on Capital Financial and Medikaloka Hermina 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 Capital Financial with a short position of Medikaloka Hermina. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capital Financial and Medikaloka Hermina.

Diversification Opportunities for Capital Financial and Medikaloka Hermina

-0.28

Correlation Coefficient

Capital Financial  Medikaloka Hermina

Very good diversification

The 3 months correlation between Capital and Medikaloka is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Capital Financial Indonesia and Medikaloka Hermina PT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Medikaloka Hermina and Capital Financial 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 Capital Financial Indonesia are associated (or correlated) with Medikaloka Hermina. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Medikaloka Hermina has no effect on the direction of Capital Financial i.e., Capital Financial and Medikaloka Hermina go up and down completely randomly.

Pair Corralation between Capital Financial and Medikaloka Hermina

Assuming the 90 days trading horizon Capital Financial Indonesia is expected to under-perform the Medikaloka Hermina. In addition to that, Capital Financial is 1.2 times more volatile than Medikaloka Hermina PT. It trades about -0.02 of its total potential returns per unit of risk. Medikaloka Hermina PT is currently generating about 0.01 per unit of volatility. If you would invest  149,248  in Medikaloka Hermina PT on September 3, 2024 and sell it today you would earn a total of  752.00  from holding Medikaloka Hermina PT or generate 0.5% return on investment over 90 days.

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

Capital Financial Indonesia  vs.  Medikaloka Hermina PT

Capital Financial

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Capital Financial Indonesia are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent forward-looking signals, Capital Financial is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Medikaloka Hermina

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Medikaloka Hermina PT are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Medikaloka Hermina disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Capital Financial and Medikaloka Hermina

The main advantage of trading using opposite Capital Financial and Medikaloka Hermina positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Capital Financial position performs unexpectedly, Medikaloka Hermina 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 Medikaloka Hermina will offset losses from the drop in Medikaloka Hermina's long position.

The idea behind Capital Financial Indonesia and Medikaloka Hermina PT 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.