Correlation Between Mitra Keluarga and Royal Prima

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

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

Diversification Opportunities for Mitra Keluarga and Royal Prima

0.23

Correlation Coefficient

Mitra Keluarga  Royal Prima

Modest diversification

The 3 months correlation between Mitra and Royal is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Mitra Keluarga Karyasehat and Royal Prima PT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Royal Prima PT and Mitra Keluarga 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 Mitra Keluarga Karyasehat are associated (or correlated) with Royal Prima. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Royal Prima PT has no effect on the direction of Mitra Keluarga i.e., Mitra Keluarga and Royal Prima go up and down completely randomly.

Pair Corralation between Mitra Keluarga and Royal Prima

Assuming the 90 days trading horizon Mitra Keluarga Karyasehat is expected to under-perform the Royal Prima. In addition to that, Mitra Keluarga is 1.16 times more volatile than Royal Prima PT. It trades about -0.01 of its total potential returns per unit of risk. Royal Prima PT is currently generating about 0.03 per unit of volatility. If you would invest  5,600  in Royal Prima PT on December 20, 2024 and sell it today you would earn a total of  100.00  from holding Royal Prima PT or generate 1.79% return on investment over 90 days.

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

Mitra Keluarga Karyasehat  vs.  Royal Prima PT

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 quite persistent forward-looking signals, Mitra Keluarga is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Royal Prima PT

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Royal Prima PT are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent forward-looking signals, Royal Prima 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 Mitra Keluarga and Royal Prima

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

The idea behind Mitra Keluarga Karyasehat and Royal Prima PT 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.