Correlation Between PT MNC and Bima Sakti

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

Diversification Opportunities for PT MNC and Bima Sakti

-0.13

Correlation Coefficient

PT MNC  Bima Sakti

Good diversification

The 3 months correlation between IATA and Bima is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding PT MNC Energy and Bima Sakti Pertiwi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bima Sakti Pertiwi 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 Bima Sakti. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bima Sakti Pertiwi has no effect on the direction of PT MNC i.e., PT MNC and Bima Sakti go up and down completely randomly.

Pair Corralation between PT MNC and Bima Sakti

Assuming the 90 days trading horizon PT MNC Energy is expected to under-perform the Bima Sakti. In addition to that, PT MNC is 1.0 times more volatile than Bima Sakti Pertiwi. It trades about 0.0 of its total potential returns per unit of risk. Bima Sakti Pertiwi is currently generating about 0.21 per unit of volatility. If you would invest  5,100  in Bima Sakti Pertiwi on December 29, 2024 and sell it today you would earn a total of  1,800  from holding Bima Sakti Pertiwi or generate 35.29% return on investment over 90 days.

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

PT MNC Energy  vs.  Bima Sakti Pertiwi

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.

Bima Sakti Pertiwi

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Bima Sakti Pertiwi are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Bima Sakti disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with PT MNC and Bima Sakti

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

The idea behind PT MNC Energy and Bima Sakti Pertiwi 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.