Correlation Between Energi Mega and Mitrabahtera Segara

Can any of the company-specific risk be diversified away by investing in both Energi Mega and Mitrabahtera Segara 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 Energi Mega and Mitrabahtera Segara into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Energi Mega Persada and Mitrabahtera Segara Sejati, you can compare the effects of market volatilities on Energi Mega and Mitrabahtera Segara 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 Energi Mega with a short position of Mitrabahtera Segara. Check out your portfolio center. Please also check ongoing floating volatility patterns of Energi Mega and Mitrabahtera Segara.

Diversification Opportunities for Energi Mega and Mitrabahtera Segara

0.22

Correlation Coefficient

Energi Mega  Mitrabahtera Segara

Modest diversification

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

Pair Corralation between Energi Mega and Mitrabahtera Segara

Assuming the 90 days trading horizon Energi Mega Persada is expected to generate 1.71 times more return on investment than Mitrabahtera Segara. However, Energi Mega is 1.71 times more volatile than Mitrabahtera Segara Sejati. It trades about 0.09 of its potential returns per unit of risk. Mitrabahtera Segara Sejati is currently generating about 0.03 per unit of risk. If you would invest  20,000  in Energi Mega Persada on August 31, 2024 and sell it today you would earn a total of  4,200  from holding Energi Mega Persada or generate 21.0% return on investment over 90 days.

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

Energi Mega Persada  vs.  Mitrabahtera Segara Sejati

Energi Mega Persada

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Energi Mega Persada are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Energi Mega disclosed solid returns over the last few months and may actually be approaching a breakup point.

Mitrabahtera Segara

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Mitrabahtera Segara Sejati are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent forward-looking signals, Mitrabahtera Segara 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 Energi Mega and Mitrabahtera Segara

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

The idea behind Energi Mega Persada and Mitrabahtera Segara Sejati 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.