Correlation Between Mandala Multifinance and Chitose Internasional

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

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

Diversification Opportunities for Mandala Multifinance and Chitose Internasional

-0.06

Correlation Coefficient

Mandala Multifinance  Chitose Internasional

Good diversification

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

Pair Corralation between Mandala Multifinance and Chitose Internasional

Assuming the 90 days trading horizon Mandala Multifinance Tbk is expected to generate 10.63 times more return on investment than Chitose Internasional. However, Mandala Multifinance is 10.63 times more volatile than Chitose Internasional Tbk. It trades about 0.05 of its potential returns per unit of risk. Chitose Internasional Tbk is currently generating about 0.01 per unit of risk. If you would invest  82,865  in Mandala Multifinance Tbk on October 15, 2024 and sell it today you would earn a total of  267,135  from holding Mandala Multifinance Tbk or generate 322.37% return on investment over 90 days.

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

Mandala Multifinance Tbk  vs.  Chitose Internasional Tbk

Mandala Multifinance Tbk

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Mandala Multifinance Tbk are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Mandala Multifinance disclosed solid returns over the last few months and may actually be approaching a breakup point.

Chitose Internasional Tbk

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Chitose Internasional Tbk has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Chitose Internasional 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 Mandala Multifinance and Chitose Internasional

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

The idea behind Mandala Multifinance Tbk and Chitose Internasional Tbk 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.