Correlation Between Mandala Multifinance and Kresna Graha

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

Diversification Opportunities for Mandala Multifinance and Kresna Graha

-0.01

Correlation Coefficient

Mandala Multifinance  Kresna Graha

Good diversification

The 3 months correlation between Mandala and Kresna is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Mandala Multifinance Tbk 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 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 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 Mandala Multifinance i.e., Mandala Multifinance and Kresna Graha go up and down completely randomly.

Pair Corralation between Mandala Multifinance and Kresna Graha

Assuming the 90 days trading horizon Mandala Multifinance Tbk is expected to generate 6.68 times more return on investment than Kresna Graha. However, Mandala Multifinance is 6.68 times more volatile than Kresna Graha Investama. It trades about 0.05 of its potential returns per unit of risk. Kresna Graha Investama is currently generating about -0.03 per unit of risk. If you would invest  86,110  in Mandala Multifinance Tbk on December 2, 2024 and sell it today you would earn a total of  210,890  from holding Mandala Multifinance Tbk or generate 244.91% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.79%
Values	Daily Returns

Mandala Multifinance Tbk  vs.  Kresna Graha Investama

Mandala Multifinance Tbk

Risk-Adjusted Performance

Very Weak

Over the last 90 days Mandala Multifinance Tbk 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.

Kresna Graha Investama

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Kresna Graha Investama are ranked lower than 5 (%) 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 Mandala Multifinance and Kresna Graha

The main advantage of trading using opposite Mandala Multifinance and Kresna Graha positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mandala Multifinance 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 Mandala Multifinance Tbk 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.

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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.