Correlation Between Mitrabara Adiperdana and PT Cerestar

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

By analyzing existing cross correlation between Mitrabara Adiperdana PT and PT Cerestar Indonesia, you can compare the effects of market volatilities on Mitrabara Adiperdana and PT Cerestar 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 Mitrabara Adiperdana with a short position of PT Cerestar. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mitrabara Adiperdana and PT Cerestar.

Diversification Opportunities for Mitrabara Adiperdana and PT Cerestar

0.87

Correlation Coefficient

Mitrabara Adiperdana  PT Cerestar

Very poor diversification

The 3 months correlation between Mitrabara and TRGU is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Mitrabara Adiperdana PT and PT Cerestar Indonesia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PT Cerestar Indonesia and Mitrabara Adiperdana 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 Mitrabara Adiperdana PT are associated (or correlated) with PT Cerestar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PT Cerestar Indonesia has no effect on the direction of Mitrabara Adiperdana i.e., Mitrabara Adiperdana and PT Cerestar go up and down completely randomly.

Pair Corralation between Mitrabara Adiperdana and PT Cerestar

Assuming the 90 days trading horizon Mitrabara Adiperdana PT is expected to under-perform the PT Cerestar. In addition to that, Mitrabara Adiperdana is 1.98 times more volatile than PT Cerestar Indonesia. It trades about -0.35 of its total potential returns per unit of risk. PT Cerestar Indonesia is currently generating about -0.17 per unit of volatility. If you would invest  20,600  in PT Cerestar Indonesia on December 30, 2024 and sell it today you would lose (2,600) from holding PT Cerestar Indonesia or give up 12.62% of portfolio value over 90 days.

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

Mitrabara Adiperdana PT  vs.  PT Cerestar Indonesia

Mitrabara Adiperdana

Risk-Adjusted Performance

Very Weak

Over the last 90 days Mitrabara Adiperdana PT has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's forward-looking signals remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

PT Cerestar Indonesia

Risk-Adjusted Performance

Very Weak

Over the last 90 days PT Cerestar Indonesia has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's forward-looking signals remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Mitrabara Adiperdana and PT Cerestar

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

The idea behind Mitrabara Adiperdana PT and PT Cerestar Indonesia 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.