Correlation Between Megapolitan Developments and Surya Semesta

Can any of the company-specific risk be diversified away by investing in both Megapolitan Developments and Surya Semesta 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 Megapolitan Developments and Surya Semesta into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Megapolitan Developments Tbk and Surya Semesta Internusa, you can compare the effects of market volatilities on Megapolitan Developments and Surya Semesta 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 Megapolitan Developments with a short position of Surya Semesta. Check out your portfolio center. Please also check ongoing floating volatility patterns of Megapolitan Developments and Surya Semesta.

Diversification Opportunities for Megapolitan Developments and Surya Semesta

0.17

Correlation Coefficient

Megapolitan Developments  Surya Semesta

Average diversification

The 3 months correlation between Megapolitan and Surya is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Megapolitan Developments Tbk and Surya Semesta Internusa in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Surya Semesta Internusa and Megapolitan Developments 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 Megapolitan Developments Tbk are associated (or correlated) with Surya Semesta. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Surya Semesta Internusa has no effect on the direction of Megapolitan Developments i.e., Megapolitan Developments and Surya Semesta go up and down completely randomly.

Pair Corralation between Megapolitan Developments and Surya Semesta

Assuming the 90 days trading horizon Megapolitan Developments Tbk is expected to generate 2.11 times more return on investment than Surya Semesta. However, Megapolitan Developments is 2.11 times more volatile than Surya Semesta Internusa. It trades about 0.0 of its potential returns per unit of risk. Surya Semesta Internusa is currently generating about -0.05 per unit of risk. If you would invest  14,400  in Megapolitan Developments Tbk on October 27, 2024 and sell it today you would lose (2,100) from holding Megapolitan Developments Tbk or give up 14.58% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.36%
Values	Daily Returns

Megapolitan Developments Tbk  vs.  Surya Semesta Internusa

Megapolitan Developments

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Megapolitan Developments Tbk has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Megapolitan Developments is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Surya Semesta Internusa

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Surya Semesta Internusa has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's forward-looking signals remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with Megapolitan Developments and Surya Semesta

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

The idea behind Megapolitan Developments Tbk and Surya Semesta Internusa 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 Stocks Directory module to find actively traded stocks across global markets.