Correlation Between Mitra Pinasthika and Sumber Alfaria

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Can any of the company-specific risk be diversified away by investing in both Mitra Pinasthika and Sumber Alfaria 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 Pinasthika and Sumber Alfaria into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mitra Pinasthika Mustika and Sumber Alfaria Trijaya, you can compare the effects of market volatilities on Mitra Pinasthika and Sumber Alfaria 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 Pinasthika with a short position of Sumber Alfaria. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mitra Pinasthika and Sumber Alfaria.

Diversification Opportunities for Mitra Pinasthika and Sumber Alfaria

0.47
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Mitra and Sumber is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Mitra Pinasthika Mustika and Sumber Alfaria Trijaya in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sumber Alfaria Trijaya and Mitra Pinasthika 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 Pinasthika Mustika are associated (or correlated) with Sumber Alfaria. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sumber Alfaria Trijaya has no effect on the direction of Mitra Pinasthika i.e., Mitra Pinasthika and Sumber Alfaria go up and down completely randomly.

Pair Corralation between Mitra Pinasthika and Sumber Alfaria

Assuming the 90 days trading horizon Mitra Pinasthika Mustika is expected to under-perform the Sumber Alfaria. But the stock apears to be less risky and, when comparing its historical volatility, Mitra Pinasthika Mustika is 3.61 times less risky than Sumber Alfaria. The stock trades about -0.13 of its potential returns per unit of risk. The Sumber Alfaria Trijaya is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  289,000  in Sumber Alfaria Trijaya on August 31, 2024 and sell it today you would lose (4,000) from holding Sumber Alfaria Trijaya or give up 1.38% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Mitra Pinasthika Mustika  vs.  Sumber Alfaria Trijaya

 Performance 
       Timeline  
Mitra Pinasthika Mustika 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Mitra Pinasthika Mustika has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Mitra Pinasthika is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.
Sumber Alfaria Trijaya 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Sumber Alfaria Trijaya has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Sumber Alfaria is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Mitra Pinasthika and Sumber Alfaria Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Mitra Pinasthika and Sumber Alfaria

The main advantage of trading using opposite Mitra Pinasthika and Sumber Alfaria positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mitra Pinasthika position performs unexpectedly, Sumber Alfaria 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 Sumber Alfaria will offset losses from the drop in Sumber Alfaria's long position.
The idea behind Mitra Pinasthika Mustika and Sumber Alfaria Trijaya 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 Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.

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