Correlation Between Modern Internasional and Mitra Keluarga

Can any of the company-specific risk be diversified away by investing in both Modern Internasional and Mitra Keluarga 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 Modern Internasional and Mitra Keluarga into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Modern Internasional Tbk and Mitra Keluarga Karyasehat, you can compare the effects of market volatilities on Modern Internasional and Mitra Keluarga 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 Modern Internasional with a short position of Mitra Keluarga. Check out your portfolio center. Please also check ongoing floating volatility patterns of Modern Internasional and Mitra Keluarga.

Diversification Opportunities for Modern Internasional and Mitra Keluarga

-0.53

Correlation Coefficient

Modern Internasional  Mitra Keluarga

Excellent diversification

The 3 months correlation between Modern and Mitra is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Modern Internasional Tbk and Mitra Keluarga Karyasehat in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mitra Keluarga Karyasehat and Modern Internasional 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 Modern Internasional Tbk are associated (or correlated) with Mitra Keluarga. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mitra Keluarga Karyasehat has no effect on the direction of Modern Internasional i.e., Modern Internasional and Mitra Keluarga go up and down completely randomly.

Pair Corralation between Modern Internasional and Mitra Keluarga

Assuming the 90 days trading horizon Modern Internasional Tbk is expected to generate 4.65 times more return on investment than Mitra Keluarga. However, Modern Internasional is 4.65 times more volatile than Mitra Keluarga Karyasehat. It trades about 0.04 of its potential returns per unit of risk. Mitra Keluarga Karyasehat is currently generating about -0.02 per unit of risk. If you would invest  700.00  in Modern Internasional Tbk on December 2, 2024 and sell it today you would lose (100.00) from holding Modern Internasional Tbk or give up 14.29% of portfolio value over 90 days.

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

Modern Internasional Tbk  vs.  Mitra Keluarga Karyasehat

Modern Internasional Tbk

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Modern Internasional Tbk are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Modern Internasional disclosed solid returns over the last few months and may actually be approaching a breakup point.

Mitra Keluarga Karyasehat

Risk-Adjusted Performance

Very Weak

Over the last 90 days Mitra Keluarga Karyasehat has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's forward-looking signals remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with Modern Internasional and Mitra Keluarga

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

The idea behind Modern Internasional Tbk and Mitra Keluarga Karyasehat 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.