Correlation Between Merdeka Copper and Elang Mahkota

Can any of the company-specific risk be diversified away by investing in both Merdeka Copper and Elang Mahkota 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 Elang Mahkota 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 Elang Mahkota Teknologi, you can compare the effects of market volatilities on Merdeka Copper and Elang Mahkota 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 Elang Mahkota. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merdeka Copper and Elang Mahkota.

Diversification Opportunities for Merdeka Copper and Elang Mahkota

-0.09

Correlation Coefficient

Merdeka Copper  Elang Mahkota

Good diversification

The 3 months correlation between Merdeka and Elang is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Merdeka Copper Gold and Elang Mahkota Teknologi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elang Mahkota Teknologi 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 Elang Mahkota. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Elang Mahkota Teknologi has no effect on the direction of Merdeka Copper i.e., Merdeka Copper and Elang Mahkota go up and down completely randomly.

Pair Corralation between Merdeka Copper and Elang Mahkota

Assuming the 90 days trading horizon Merdeka Copper Gold is expected to under-perform the Elang Mahkota. In addition to that, Merdeka Copper is 1.39 times more volatile than Elang Mahkota Teknologi. It trades about -0.07 of its total potential returns per unit of risk. Elang Mahkota Teknologi is currently generating about -0.06 per unit of volatility. If you would invest  57,500  in Elang Mahkota Teknologi on December 1, 2024 and sell it today you would lose (3,500) from holding Elang Mahkota Teknologi or give up 6.09% of portfolio value over 90 days.

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

Merdeka Copper Gold  vs.  Elang Mahkota Teknologi

Merdeka Copper Gold

Risk-Adjusted Performance

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 April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Elang Mahkota Teknologi

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Elang Mahkota Teknologi are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Elang Mahkota may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Merdeka Copper and Elang Mahkota

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

The idea behind Merdeka Copper Gold and Elang Mahkota Teknologi 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.