Correlation Between PT MNC and Gozco Plantations

Can any of the company-specific risk be diversified away by investing in both PT MNC and Gozco Plantations 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 Gozco Plantations 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 Gozco Plantations Tbk, you can compare the effects of market volatilities on PT MNC and Gozco Plantations 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 Gozco Plantations. Check out your portfolio center. Please also check ongoing floating volatility patterns of PT MNC and Gozco Plantations.

Diversification Opportunities for PT MNC and Gozco Plantations

-0.06

Correlation Coefficient

PT MNC  Gozco Plantations

Good diversification

The 3 months correlation between IATA and Gozco is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding PT MNC Energy and Gozco Plantations Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gozco Plantations Tbk 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 Gozco Plantations. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gozco Plantations Tbk has no effect on the direction of PT MNC i.e., PT MNC and Gozco Plantations go up and down completely randomly.

Pair Corralation between PT MNC and Gozco Plantations

Assuming the 90 days trading horizon PT MNC Energy is expected to generate 0.89 times more return on investment than Gozco Plantations. However, PT MNC Energy is 1.12 times less risky than Gozco Plantations. It trades about 0.0 of its potential returns per unit of risk. Gozco Plantations Tbk is currently generating about -0.09 per unit of risk. If you would invest  5,000  in PT MNC Energy on December 29, 2024 and sell it today you would lose (100.00) from holding PT MNC Energy or give up 2.0% of portfolio value over 90 days.

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

PT MNC Energy  vs.  Gozco Plantations Tbk

PT MNC Energy

Risk-Adjusted Performance

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 quite persistent forward-looking signals, PT MNC is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Gozco Plantations Tbk

Risk-Adjusted Performance

Very Weak

Over the last 90 days Gozco Plantations Tbk 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 April 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 Gozco Plantations

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

The idea behind PT MNC Energy and Gozco Plantations Tbk 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.