Correlation Between Bank Mayapada and Malacca Trust

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

By analyzing existing cross correlation between Bank Mayapada Internasional and Malacca Trust Wuwungan, you can compare the effects of market volatilities on Bank Mayapada and Malacca Trust 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 Bank Mayapada with a short position of Malacca Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank Mayapada and Malacca Trust.

Diversification Opportunities for Bank Mayapada and Malacca Trust

0.44

Correlation Coefficient

Bank Mayapada  Malacca Trust

Very weak diversification

The 3 months correlation between Bank and Malacca is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Bank Mayapada Internasional and Malacca Trust Wuwungan in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Malacca Trust Wuwungan and Bank Mayapada 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 Bank Mayapada Internasional are associated (or correlated) with Malacca Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Malacca Trust Wuwungan has no effect on the direction of Bank Mayapada i.e., Bank Mayapada and Malacca Trust go up and down completely randomly.

Pair Corralation between Bank Mayapada and Malacca Trust

Assuming the 90 days trading horizon Bank Mayapada Internasional is expected to under-perform the Malacca Trust. In addition to that, Bank Mayapada is 1.04 times more volatile than Malacca Trust Wuwungan. It trades about -0.05 of its total potential returns per unit of risk. Malacca Trust Wuwungan is currently generating about 0.13 per unit of volatility. If you would invest  7,300  in Malacca Trust Wuwungan on October 12, 2024 and sell it today you would earn a total of  8,200  from holding Malacca Trust Wuwungan or generate 112.33% return on investment over 90 days.

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

Bank Mayapada Internasional  vs.  Malacca Trust Wuwungan

Bank Mayapada Intern

Risk-Adjusted Performance

0 of 100

Very Weak

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

Malacca Trust Wuwungan

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Malacca Trust Wuwungan has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Malacca Trust 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 Bank Mayapada and Malacca Trust

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

The idea behind Bank Mayapada Internasional and Malacca Trust Wuwungan 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.