Correlation Between Merdeka Copper and Kresna Graha

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

Diversification Opportunities for Merdeka Copper and Kresna Graha

-0.06

Correlation Coefficient

Merdeka Copper  Kresna Graha

Good diversification

The 3 months correlation between Merdeka and Kresna is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Merdeka Copper Gold and Kresna Graha Investama in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kresna Graha Investama 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 Kresna Graha. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kresna Graha Investama has no effect on the direction of Merdeka Copper i.e., Merdeka Copper and Kresna Graha go up and down completely randomly.

Pair Corralation between Merdeka Copper and Kresna Graha

Assuming the 90 days trading horizon Merdeka Copper Gold is expected to under-perform the Kresna Graha. But the stock apears to be less risky and, when comparing its historical volatility, Merdeka Copper Gold is 1.72 times less risky than Kresna Graha. The stock trades about -0.02 of its potential returns per unit of risk. The Kresna Graha Investama is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  700.00  in Kresna Graha Investama on December 31, 2024 and sell it today you would earn a total of  300.00  from holding Kresna Graha Investama or generate 42.86% return on investment over 90 days.

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

Merdeka Copper Gold  vs.  Kresna Graha Investama

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 quite persistent forward-looking signals, Merdeka Copper is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Kresna Graha Investama

Risk-Adjusted Performance

OK

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

Pair Trading with Merdeka Copper and Kresna Graha

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

The idea behind Merdeka Copper Gold and Kresna Graha Investama 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.