Correlation Between Elang Mahkota and M Cash

Can any of the company-specific risk be diversified away by investing in both Elang Mahkota and M Cash 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 Elang Mahkota and M Cash into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Elang Mahkota Teknologi and M Cash Integrasi, you can compare the effects of market volatilities on Elang Mahkota and M Cash 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 Elang Mahkota with a short position of M Cash. Check out your portfolio center. Please also check ongoing floating volatility patterns of Elang Mahkota and M Cash.

Diversification Opportunities for Elang Mahkota and M Cash

-0.22

Correlation Coefficient

Elang Mahkota  M Cash

Very good diversification

The 3 months correlation between Elang and MCAS is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Elang Mahkota Teknologi and M Cash Integrasi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on M Cash Integrasi and Elang Mahkota 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 Elang Mahkota Teknologi are associated (or correlated) with M Cash. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of M Cash Integrasi has no effect on the direction of Elang Mahkota i.e., Elang Mahkota and M Cash go up and down completely randomly.

Pair Corralation between Elang Mahkota and M Cash

Assuming the 90 days trading horizon Elang Mahkota Teknologi is expected to generate 1.19 times more return on investment than M Cash. However, Elang Mahkota is 1.19 times more volatile than M Cash Integrasi. It trades about 0.12 of its potential returns per unit of risk. M Cash Integrasi is currently generating about 0.03 per unit of risk. If you would invest  41,000  in Elang Mahkota Teknologi on September 3, 2024 and sell it today you would earn a total of  10,000  from holding Elang Mahkota Teknologi or generate 24.39% return on investment over 90 days.

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

Elang Mahkota Teknologi  vs.  M Cash Integrasi

Elang Mahkota Teknologi

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Elang Mahkota Teknologi are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Elang Mahkota disclosed solid returns over the last few months and may actually be approaching a breakup point.

M Cash Integrasi

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in M Cash Integrasi are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent forward-looking signals, M Cash is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Elang Mahkota and M Cash

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

The idea behind Elang Mahkota Teknologi and M Cash Integrasi 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.