Correlation Between Sanurhasta Mitra and Megapower Makmur

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

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

Diversification Opportunities for Sanurhasta Mitra and Megapower Makmur

0.39

Correlation Coefficient

Sanurhasta Mitra  Megapower Makmur

Weak diversification

The 3 months correlation between Sanurhasta and Megapower is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Sanurhasta Mitra PT and Megapower Makmur TBK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Megapower Makmur TBK and Sanurhasta Mitra 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 Sanurhasta Mitra PT are associated (or correlated) with Megapower Makmur. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Megapower Makmur TBK has no effect on the direction of Sanurhasta Mitra i.e., Sanurhasta Mitra and Megapower Makmur go up and down completely randomly.

Pair Corralation between Sanurhasta Mitra and Megapower Makmur

Assuming the 90 days trading horizon Sanurhasta Mitra PT is expected to generate 0.83 times more return on investment than Megapower Makmur. However, Sanurhasta Mitra PT is 1.2 times less risky than Megapower Makmur. It trades about 0.39 of its potential returns per unit of risk. Megapower Makmur TBK is currently generating about 0.1 per unit of risk. If you would invest  2,200  in Sanurhasta Mitra PT on October 26, 2024 and sell it today you would earn a total of  5,700  from holding Sanurhasta Mitra PT or generate 259.09% return on investment over 90 days.

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

Sanurhasta Mitra PT  vs.  Megapower Makmur TBK

Sanurhasta Mitra

Risk-Adjusted Performance

31 of 100

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Sanurhasta Mitra PT are ranked lower than 31 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Sanurhasta Mitra disclosed solid returns over the last few months and may actually be approaching a breakup point.

Megapower Makmur TBK

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Megapower Makmur TBK are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Megapower Makmur disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sanurhasta Mitra and Megapower Makmur

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

The idea behind Sanurhasta Mitra PT and Megapower Makmur 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.