Correlation Between Companhia Brasileira and PT Mitra

Can any of the company-specific risk be diversified away by investing in both Companhia Brasileira and PT Mitra 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 Companhia Brasileira and PT Mitra into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Companhia Brasileira De and PT Mitra Adiperkasa, you can compare the effects of market volatilities on Companhia Brasileira and PT Mitra 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 Companhia Brasileira with a short position of PT Mitra. Check out your portfolio center. Please also check ongoing floating volatility patterns of Companhia Brasileira and PT Mitra.

Diversification Opportunities for Companhia Brasileira and PT Mitra

0.0

Correlation Coefficient

Companhia Brasileira  PT Mitra

Pay attention - limited upside

The 3 months correlation between Companhia and PMDKF is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Companhia Brasileira De and PT Mitra Adiperkasa in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PT Mitra Adiperkasa and Companhia Brasileira 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 Companhia Brasileira De are associated (or correlated) with PT Mitra. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PT Mitra Adiperkasa has no effect on the direction of Companhia Brasileira i.e., Companhia Brasileira and PT Mitra go up and down completely randomly.

Pair Corralation between Companhia Brasileira and PT Mitra

If you would invest (100.00) in PT Mitra Adiperkasa on November 28, 2024 and sell it today you would earn a total of  100.00  from holding PT Mitra Adiperkasa or generate -100.0% return on investment over 90 days.

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

Companhia Brasileira De  vs.  PT Mitra Adiperkasa

Companhia Brasileira

Risk-Adjusted Performance

Very Weak

Over the last 90 days Companhia Brasileira De has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental drivers, Companhia Brasileira is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

PT Mitra Adiperkasa

Risk-Adjusted Performance

Very Weak

Over the last 90 days PT Mitra Adiperkasa has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable forward-looking signals, PT Mitra is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Companhia Brasileira and PT Mitra

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

The idea behind Companhia Brasileira De and PT Mitra Adiperkasa 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.

Check out your portfolio center.

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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.