Correlation Between PT MNC and Campina Ice

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

By analyzing existing cross correlation between PT MNC Energy and Campina Ice Cream, you can compare the effects of market volatilities on PT MNC and Campina Ice 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 PT MNC with a short position of Campina Ice. Check out your portfolio center. Please also check ongoing floating volatility patterns of PT MNC and Campina Ice.

Diversification Opportunities for PT MNC and Campina Ice

0.49

Correlation Coefficient

PT MNC  Campina Ice

Very weak diversification

The 3 months correlation between IATA and Campina is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding PT MNC Energy and Campina Ice Cream in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Campina Ice Cream and PT MNC 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 PT MNC Energy are associated (or correlated) with Campina Ice. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Campina Ice Cream has no effect on the direction of PT MNC i.e., PT MNC and Campina Ice go up and down completely randomly.

Pair Corralation between PT MNC and Campina Ice

Assuming the 90 days trading horizon PT MNC Energy is expected to under-perform the Campina Ice. But the stock apears to be less risky and, when comparing its historical volatility, PT MNC Energy is 1.1 times less risky than Campina Ice. The stock trades about -0.05 of its potential returns per unit of risk. The Campina Ice Cream is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  25,962  in Campina Ice Cream on September 3, 2024 and sell it today you would earn a total of  238.00  from holding Campina Ice Cream or generate 0.92% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	99.79%
Values	Daily Returns

PT MNC Energy  vs.  Campina Ice Cream

PT MNC Energy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PT MNC Energy 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.

Campina Ice Cream

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Campina Ice Cream has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's forward-looking signals remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with PT MNC and Campina Ice

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

The idea behind PT MNC Energy and Campina Ice Cream 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.