Correlation Between Metropolitan Kentjana and Maha Properti

Can any of the company-specific risk be diversified away by investing in both Metropolitan Kentjana and Maha Properti 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 Maha Properti 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 Maha Properti Indonesia, you can compare the effects of market volatilities on Metropolitan Kentjana and Maha Properti 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 Maha Properti. Check out your portfolio center. Please also check ongoing floating volatility patterns of Metropolitan Kentjana and Maha Properti.

Diversification Opportunities for Metropolitan Kentjana and Maha Properti

-0.1

Correlation Coefficient

Metropolitan Kentjana  Maha Properti

Good diversification

The 3 months correlation between Metropolitan and Maha is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Metropolitan Kentjana Tbk and Maha Properti Indonesia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Maha Properti Indonesia 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 Maha Properti. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Maha Properti Indonesia has no effect on the direction of Metropolitan Kentjana i.e., Metropolitan Kentjana and Maha Properti go up and down completely randomly.

Pair Corralation between Metropolitan Kentjana and Maha Properti

Assuming the 90 days trading horizon Metropolitan Kentjana Tbk is expected to under-perform the Maha Properti. In addition to that, Metropolitan Kentjana is 3.16 times more volatile than Maha Properti Indonesia. It trades about -0.02 of its total potential returns per unit of risk. Maha Properti Indonesia is currently generating about 0.02 per unit of volatility. If you would invest  201,000  in Maha Properti Indonesia on December 2, 2024 and sell it today you would earn a total of  2,000  from holding Maha Properti Indonesia or generate 1.0% 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.  Maha Properti Indonesia

Metropolitan Kentjana Tbk

Risk-Adjusted Performance

Very Weak

Over the last 90 days Metropolitan Kentjana Tbk has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

Maha Properti Indonesia

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Maha Properti Indonesia are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent forward-looking signals, Maha Properti 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 Metropolitan Kentjana and Maha Properti

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

The idea behind Metropolitan Kentjana Tbk and Maha Properti Indonesia 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.