Correlation Between Merdeka Copper and Capital Financial

Can any of the company-specific risk be diversified away by investing in both Merdeka Copper and Capital Financial 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 Merdeka Copper and Capital Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Merdeka Copper Gold and Capital Financial Indonesia, you can compare the effects of market volatilities on Merdeka Copper and Capital Financial 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 Merdeka Copper with a short position of Capital Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merdeka Copper and Capital Financial.

Diversification Opportunities for Merdeka Copper and Capital Financial

-0.45

Correlation Coefficient

Merdeka Copper  Capital Financial

Very good diversification

The 3 months correlation between Merdeka and Capital is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Merdeka Copper Gold and Capital Financial Indonesia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capital Financial and Merdeka Copper 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 Merdeka Copper Gold are associated (or correlated) with Capital Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capital Financial has no effect on the direction of Merdeka Copper i.e., Merdeka Copper and Capital Financial go up and down completely randomly.

Pair Corralation between Merdeka Copper and Capital Financial

Assuming the 90 days trading horizon Merdeka Copper Gold is expected to under-perform the Capital Financial. But the stock apears to be less risky and, when comparing its historical volatility, Merdeka Copper Gold is 1.28 times less risky than Capital Financial. The stock trades about -0.15 of its potential returns per unit of risk. The Capital Financial Indonesia is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  50,000  in Capital Financial Indonesia on August 31, 2024 and sell it today you would earn a total of  1,000.00  from holding Capital Financial Indonesia or generate 2.0% return on investment over 90 days.

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

Merdeka Copper Gold  vs.  Capital Financial Indonesia

Merdeka Copper Gold

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Merdeka Copper Gold 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 December 2024. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Capital Financial

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Capital Financial Indonesia are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent forward-looking signals, Capital Financial 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 Merdeka Copper and Capital Financial

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

The idea behind Merdeka Copper Gold and Capital Financial 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.