Correlation Between Mitrabahtera Segara and Royalindo Investa

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

By analyzing existing cross correlation between Mitrabahtera Segara Sejati and Royalindo Investa Wijaya, you can compare the effects of market volatilities on Mitrabahtera Segara and Royalindo Investa 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 Mitrabahtera Segara with a short position of Royalindo Investa. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mitrabahtera Segara and Royalindo Investa.

Diversification Opportunities for Mitrabahtera Segara and Royalindo Investa

-0.57

Correlation Coefficient

Mitrabahtera Segara  Royalindo Investa

Excellent diversification

The 3 months correlation between Mitrabahtera and Royalindo is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Mitrabahtera Segara Sejati and Royalindo Investa Wijaya in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Royalindo Investa Wijaya and Mitrabahtera Segara 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 Mitrabahtera Segara Sejati are associated (or correlated) with Royalindo Investa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Royalindo Investa Wijaya has no effect on the direction of Mitrabahtera Segara i.e., Mitrabahtera Segara and Royalindo Investa go up and down completely randomly.

Pair Corralation between Mitrabahtera Segara and Royalindo Investa

Assuming the 90 days trading horizon Mitrabahtera Segara Sejati is expected to under-perform the Royalindo Investa. But the stock apears to be less risky and, when comparing its historical volatility, Mitrabahtera Segara Sejati is 3.93 times less risky than Royalindo Investa. The stock trades about -0.02 of its potential returns per unit of risk. The Royalindo Investa Wijaya is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  10,400  in Royalindo Investa Wijaya on December 3, 2024 and sell it today you would earn a total of  3,600  from holding Royalindo Investa Wijaya or generate 34.62% return on investment over 90 days.

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

Mitrabahtera Segara Sejati  vs.  Royalindo Investa Wijaya

Mitrabahtera Segara

Risk-Adjusted Performance

Very Weak

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

Royalindo Investa Wijaya

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Royalindo Investa Wijaya are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Royalindo Investa disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Mitrabahtera Segara and Royalindo Investa

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

The idea behind Mitrabahtera Segara Sejati and Royalindo Investa Wijaya 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.