Correlation Between PT Mandiri and Malindo Feedmill

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

By analyzing existing cross correlation between PT Mandiri Herindo and Malindo Feedmill Tbk, you can compare the effects of market volatilities on PT Mandiri and Malindo Feedmill 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 Mandiri with a short position of Malindo Feedmill. Check out your portfolio center. Please also check ongoing floating volatility patterns of PT Mandiri and Malindo Feedmill.

Diversification Opportunities for PT Mandiri and Malindo Feedmill

0.52

Correlation Coefficient

PT Mandiri  Malindo Feedmill

Very weak diversification

The 3 months correlation between MAHA and Malindo is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding PT Mandiri Herindo and Malindo Feedmill Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Malindo Feedmill Tbk and PT Mandiri 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 Mandiri Herindo are associated (or correlated) with Malindo Feedmill. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Malindo Feedmill Tbk has no effect on the direction of PT Mandiri i.e., PT Mandiri and Malindo Feedmill go up and down completely randomly.

Pair Corralation between PT Mandiri and Malindo Feedmill

Assuming the 90 days trading horizon PT Mandiri Herindo is expected to generate 0.6 times more return on investment than Malindo Feedmill. However, PT Mandiri Herindo is 1.66 times less risky than Malindo Feedmill. It trades about -0.09 of its potential returns per unit of risk. Malindo Feedmill Tbk is currently generating about -0.07 per unit of risk. If you would invest  17,700  in PT Mandiri Herindo on December 1, 2024 and sell it today you would lose (1,400) from holding PT Mandiri Herindo or give up 7.91% of portfolio value over 90 days.

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

PT Mandiri Herindo  vs.  Malindo Feedmill Tbk

PT Mandiri Herindo

Risk-Adjusted Performance

Very Weak

Over the last 90 days PT Mandiri Herindo has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's forward-looking signals remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Malindo Feedmill Tbk

Risk-Adjusted Performance

Very Weak

Over the last 90 days Malindo Feedmill Tbk has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's forward-looking signals remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with PT Mandiri and Malindo Feedmill

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

The idea behind PT Mandiri Herindo and Malindo Feedmill 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.

Check out your portfolio center.

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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.