Correlation Between Mitra Energi and Alphabet

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

By analyzing existing cross correlation between Mitra Energi Persada and Alphabet Inc Class A, you can compare the effects of market volatilities on Mitra Energi and Alphabet 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 Mitra Energi with a short position of Alphabet. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mitra Energi and Alphabet.

Diversification Opportunities for Mitra Energi and Alphabet

-0.69

Correlation Coefficient

Mitra Energi  Alphabet

Excellent diversification

The 3 months correlation between Mitra and Alphabet is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Mitra Energi Persada and Alphabet Inc Class A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alphabet Class A and Mitra Energi 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 Mitra Energi Persada are associated (or correlated) with Alphabet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alphabet Class A has no effect on the direction of Mitra Energi i.e., Mitra Energi and Alphabet go up and down completely randomly.

Pair Corralation between Mitra Energi and Alphabet

Assuming the 90 days trading horizon Mitra Energi Persada is expected to generate 2.31 times more return on investment than Alphabet. However, Mitra Energi is 2.31 times more volatile than Alphabet Inc Class A. It trades about 0.21 of its potential returns per unit of risk. Alphabet Inc Class A is currently generating about -0.14 per unit of risk. If you would invest  58,500  in Mitra Energi Persada on December 23, 2024 and sell it today you would earn a total of  35,000  from holding Mitra Energi Persada or generate 59.83% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	95.16%
Values	Daily Returns

Mitra Energi Persada  vs.  Alphabet Inc Class A

Mitra Energi Persada

Risk-Adjusted Performance

Solid

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

Alphabet Class A

Risk-Adjusted Performance

Very Weak

Over the last 90 days Alphabet Inc Class A has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's primary indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Mitra Energi and Alphabet

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

The idea behind Mitra Energi Persada and Alphabet Inc Class A 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.