Correlation Between Metropolitan Kentjana and Pollux Investasi

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

Diversification Opportunities for Metropolitan Kentjana and Pollux Investasi

0.13

Correlation Coefficient

Metropolitan Kentjana  Pollux Investasi

Average diversification

The 3 months correlation between Metropolitan and Pollux is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Metropolitan Kentjana Tbk and Pollux Investasi Internasional in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pollux Investasi Int 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 Pollux Investasi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pollux Investasi Int has no effect on the direction of Metropolitan Kentjana i.e., Metropolitan Kentjana and Pollux Investasi go up and down completely randomly.

Pair Corralation between Metropolitan Kentjana and Pollux Investasi

Assuming the 90 days trading horizon Metropolitan Kentjana Tbk is expected to under-perform the Pollux Investasi. But the stock apears to be less risky and, when comparing its historical volatility, Metropolitan Kentjana Tbk is 2.64 times less risky than Pollux Investasi. The stock trades about -0.1 of its potential returns per unit of risk. The Pollux Investasi Internasional is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  76,000  in Pollux Investasi Internasional on September 10, 2024 and sell it today you would earn a total of  2,500  from holding Pollux Investasi Internasional or generate 3.29% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

Metropolitan Kentjana Tbk  vs.  Pollux Investasi Internasional

Metropolitan Kentjana Tbk

Risk-Adjusted Performance

0 of 100

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 latest conflicting 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.

Pollux Investasi Int

Risk-Adjusted Performance

2 of 100

Weak

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

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

The idea behind Metropolitan Kentjana Tbk and Pollux Investasi Internasional 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.