Correlation Between Metropolitan Kentjana and Cita Mineral

Can any of the company-specific risk be diversified away by investing in both Metropolitan Kentjana and Cita Mineral 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 Metropolitan Kentjana and Cita Mineral into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Metropolitan Kentjana Tbk and Cita Mineral Investindo, you can compare the effects of market volatilities on Metropolitan Kentjana and Cita Mineral 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 Metropolitan Kentjana with a short position of Cita Mineral. Check out your portfolio center. Please also check ongoing floating volatility patterns of Metropolitan Kentjana and Cita Mineral.

Diversification Opportunities for Metropolitan Kentjana and Cita Mineral

-0.38

Correlation Coefficient

Metropolitan Kentjana  Cita Mineral

Very good diversification

The 3 months correlation between Metropolitan and Cita is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Metropolitan Kentjana Tbk and Cita Mineral Investindo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cita Mineral Investindo and Metropolitan Kentjana 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 Metropolitan Kentjana Tbk are associated (or correlated) with Cita Mineral. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cita Mineral Investindo has no effect on the direction of Metropolitan Kentjana i.e., Metropolitan Kentjana and Cita Mineral go up and down completely randomly.

Pair Corralation between Metropolitan Kentjana and Cita Mineral

Assuming the 90 days trading horizon Metropolitan Kentjana Tbk is expected to generate 1.03 times more return on investment than Cita Mineral. However, Metropolitan Kentjana is 1.03 times more volatile than Cita Mineral Investindo. It trades about 0.04 of its potential returns per unit of risk. Cita Mineral Investindo is currently generating about -0.22 per unit of risk. If you would invest  2,487,500  in Metropolitan Kentjana Tbk on December 26, 2024 and sell it today you would earn a total of  85,000  from holding Metropolitan Kentjana Tbk or generate 3.42% return on investment over 90 days.

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

Metropolitan Kentjana Tbk  vs.  Cita Mineral Investindo

Metropolitan Kentjana Tbk

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Metropolitan Kentjana Tbk are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent forward-looking signals, Metropolitan Kentjana is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Cita Mineral Investindo

Risk-Adjusted Performance

Very Weak

Over the last 90 days Cita Mineral Investindo has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's forward-looking signals remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Metropolitan Kentjana and Cita Mineral

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

The idea behind Metropolitan Kentjana Tbk and Cita Mineral Investindo 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..