Correlation Between MEGA METAL and Bursa Cimento

Can any of the company-specific risk be diversified away by investing in both MEGA METAL and Bursa Cimento 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 MEGA METAL and Bursa Cimento into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between MEGA METAL and Bursa Cimento Fabrikasi, you can compare the effects of market volatilities on MEGA METAL and Bursa Cimento 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 MEGA METAL with a short position of Bursa Cimento. Check out your portfolio center. Please also check ongoing floating volatility patterns of MEGA METAL and Bursa Cimento.

Diversification Opportunities for MEGA METAL and Bursa Cimento

0.2

Correlation Coefficient

MEGA METAL  Bursa Cimento

Modest diversification

The 3 months correlation between MEGA and Bursa is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding MEGA METAL and Bursa Cimento Fabrikasi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bursa Cimento Fabrikasi and MEGA METAL 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 MEGA METAL are associated (or correlated) with Bursa Cimento. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bursa Cimento Fabrikasi has no effect on the direction of MEGA METAL i.e., MEGA METAL and Bursa Cimento go up and down completely randomly.

Pair Corralation between MEGA METAL and Bursa Cimento

Assuming the 90 days trading horizon MEGA METAL is expected to generate 2.38 times less return on investment than Bursa Cimento. In addition to that, MEGA METAL is 1.46 times more volatile than Bursa Cimento Fabrikasi. It trades about 0.02 of its total potential returns per unit of risk. Bursa Cimento Fabrikasi is currently generating about 0.06 per unit of volatility. If you would invest  467.00  in Bursa Cimento Fabrikasi on October 23, 2024 and sell it today you would earn a total of  438.00  from holding Bursa Cimento Fabrikasi or generate 93.79% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	55.35%
Values	Daily Returns

MEGA METAL  vs.  Bursa Cimento Fabrikasi

MEGA METAL

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in MEGA METAL are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong forward indicators, MEGA METAL is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Bursa Cimento Fabrikasi

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Bursa Cimento Fabrikasi are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak forward indicators, Bursa Cimento demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with MEGA METAL and Bursa Cimento

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

The idea behind MEGA METAL and Bursa Cimento Fabrikasi 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.

Check out your portfolio center.

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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.