Correlation Between Matahari Department and Intikeramik Alamasri

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

By analyzing existing cross correlation between Matahari Department Store and Intikeramik Alamasri Industri, you can compare the effects of market volatilities on Matahari Department and Intikeramik Alamasri 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 Matahari Department with a short position of Intikeramik Alamasri. Check out your portfolio center. Please also check ongoing floating volatility patterns of Matahari Department and Intikeramik Alamasri.

Diversification Opportunities for Matahari Department and Intikeramik Alamasri

0.17

Correlation Coefficient

Matahari Department  Intikeramik Alamasri

Average diversification

The 3 months correlation between Matahari and Intikeramik is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Matahari Department Store and Intikeramik Alamasri Industri in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intikeramik Alamasri and Matahari Department 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 Matahari Department Store are associated (or correlated) with Intikeramik Alamasri. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Intikeramik Alamasri has no effect on the direction of Matahari Department i.e., Matahari Department and Intikeramik Alamasri go up and down completely randomly.

Pair Corralation between Matahari Department and Intikeramik Alamasri

Assuming the 90 days trading horizon Matahari Department Store is expected to generate 0.23 times more return on investment than Intikeramik Alamasri. However, Matahari Department Store is 4.43 times less risky than Intikeramik Alamasri. It trades about 0.18 of its potential returns per unit of risk. Intikeramik Alamasri Industri is currently generating about 0.0 per unit of risk. If you would invest  140,000  in Matahari Department Store on November 27, 2024 and sell it today you would earn a total of  19,500  from holding Matahari Department Store or generate 13.93% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.25%
Values	Daily Returns

Matahari Department Store  vs.  Intikeramik Alamasri Industri

Matahari Department Store

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Matahari Department Store are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Matahari Department disclosed solid returns over the last few months and may actually be approaching a breakup point.

Intikeramik Alamasri

Risk-Adjusted Performance

Very Weak

Over the last 90 days Intikeramik Alamasri Industri has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Intikeramik Alamasri is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Matahari Department and Intikeramik Alamasri

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

The idea behind Matahari Department Store and Intikeramik Alamasri Industri 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 Stocks Directory module to find actively traded stocks across global markets.