Correlation Between Mahkota Group and Madusari Murni

Can any of the company-specific risk be diversified away by investing in both Mahkota Group and Madusari Murni 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 Mahkota Group and Madusari Murni into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Mahkota Group Tbk and Madusari Murni Indah, you can compare the effects of market volatilities on Mahkota Group and Madusari Murni 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 Mahkota Group with a short position of Madusari Murni. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mahkota Group and Madusari Murni.

Diversification Opportunities for Mahkota Group and Madusari Murni

0.4

Correlation Coefficient

Mahkota Group  Madusari Murni

Very weak diversification

The 3 months correlation between Mahkota and Madusari is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Mahkota Group Tbk and Madusari Murni Indah in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Madusari Murni Indah and Mahkota Group 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 Mahkota Group Tbk are associated (or correlated) with Madusari Murni. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Madusari Murni Indah has no effect on the direction of Mahkota Group i.e., Mahkota Group and Madusari Murni go up and down completely randomly.

Pair Corralation between Mahkota Group and Madusari Murni

Assuming the 90 days trading horizon Mahkota Group Tbk is expected to generate 0.87 times more return on investment than Madusari Murni. However, Mahkota Group Tbk is 1.16 times less risky than Madusari Murni. It trades about -0.05 of its potential returns per unit of risk. Madusari Murni Indah is currently generating about -0.09 per unit of risk. If you would invest  69,500  in Mahkota Group Tbk on December 22, 2024 and sell it today you would lose (3,500) from holding Mahkota Group Tbk or give up 5.04% of portfolio value over 90 days.

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

Mahkota Group Tbk  vs.  Madusari Murni Indah

Mahkota Group Tbk

Risk-Adjusted Performance

Very Weak

Over the last 90 days Mahkota Group Tbk has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Mahkota Group is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Madusari Murni Indah

Risk-Adjusted Performance

Very Weak

Over the last 90 days Madusari Murni Indah has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak 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 Mahkota Group and Madusari Murni

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

The idea behind Mahkota Group Tbk and Madusari Murni Indah 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.