Correlation Between Ihlas Holding and MEGA METAL

Can any of the company-specific risk be diversified away by investing in both Ihlas Holding and MEGA METAL 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 Ihlas Holding and MEGA METAL into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Ihlas Holding AS and MEGA METAL, you can compare the effects of market volatilities on Ihlas Holding and MEGA METAL 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 Ihlas Holding with a short position of MEGA METAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ihlas Holding and MEGA METAL.

Diversification Opportunities for Ihlas Holding and MEGA METAL

0.14

Correlation Coefficient

Ihlas Holding  MEGA METAL

Average diversification

The 3 months correlation between Ihlas and MEGA is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Ihlas Holding AS and MEGA METAL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MEGA METAL and Ihlas Holding 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 Ihlas Holding AS are associated (or correlated) with MEGA METAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MEGA METAL has no effect on the direction of Ihlas Holding i.e., Ihlas Holding and MEGA METAL go up and down completely randomly.

Pair Corralation between Ihlas Holding and MEGA METAL

Assuming the 90 days trading horizon Ihlas Holding AS is expected to generate 3.5 times more return on investment than MEGA METAL. However, Ihlas Holding is 3.5 times more volatile than MEGA METAL. It trades about 0.33 of its potential returns per unit of risk. MEGA METAL is currently generating about -0.03 per unit of risk. If you would invest  99.00  in Ihlas Holding AS on October 26, 2024 and sell it today you would earn a total of  222.00  from holding Ihlas Holding AS or generate 224.24% return on investment over 90 days.

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

Ihlas Holding AS  vs.  MEGA METAL

Ihlas Holding AS

Risk-Adjusted Performance

25 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Ihlas Holding AS are ranked lower than 25 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent forward indicators, Ihlas Holding demonstrated solid returns over the last few months and may actually be approaching a breakup point.

MEGA METAL

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MEGA METAL has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong forward indicators, MEGA METAL is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Ihlas Holding and MEGA METAL

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

The idea behind Ihlas Holding AS and MEGA METAL 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.