Correlation Between Menteng Heritage and Royalindo Investa

Can any of the company-specific risk be diversified away by investing in both Menteng Heritage and Royalindo Investa 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 Menteng Heritage and Royalindo Investa into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Menteng Heritage Realty and Royalindo Investa Wijaya, you can compare the effects of market volatilities on Menteng Heritage and Royalindo Investa 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 Menteng Heritage with a short position of Royalindo Investa. Check out your portfolio center. Please also check ongoing floating volatility patterns of Menteng Heritage and Royalindo Investa.

Diversification Opportunities for Menteng Heritage and Royalindo Investa

0.12

Correlation Coefficient

Menteng Heritage  Royalindo Investa

Average diversification

The 3 months correlation between Menteng and Royalindo is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Menteng Heritage Realty and Royalindo Investa Wijaya in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Royalindo Investa Wijaya and Menteng Heritage 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 Menteng Heritage Realty are associated (or correlated) with Royalindo Investa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Royalindo Investa Wijaya has no effect on the direction of Menteng Heritage i.e., Menteng Heritage and Royalindo Investa go up and down completely randomly.

Pair Corralation between Menteng Heritage and Royalindo Investa

Assuming the 90 days trading horizon Menteng Heritage Realty is expected to generate 2.44 times more return on investment than Royalindo Investa. However, Menteng Heritage is 2.44 times more volatile than Royalindo Investa Wijaya. It trades about 0.14 of its potential returns per unit of risk. Royalindo Investa Wijaya is currently generating about -0.06 per unit of risk. If you would invest  3,600  in Menteng Heritage Realty on September 12, 2024 and sell it today you would earn a total of  1,200  from holding Menteng Heritage Realty or generate 33.33% return on investment over 90 days.

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

Menteng Heritage Realty  vs.  Royalindo Investa Wijaya

Menteng Heritage Realty

Risk-Adjusted Performance

10 of 100

OK

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

Royalindo Investa Wijaya

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Royalindo Investa Wijaya has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Royalindo Investa 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 Menteng Heritage and Royalindo Investa

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

The idea behind Menteng Heritage Realty and Royalindo Investa Wijaya 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.