Correlation Between Mitra Pinasthika and Energi Mega

Can any of the company-specific risk be diversified away by investing in both Mitra Pinasthika and Energi Mega 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 Energi Mega 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 Energi Mega Persada, you can compare the effects of market volatilities on Mitra Pinasthika and Energi Mega 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 Energi Mega. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mitra Pinasthika and Energi Mega.

Diversification Opportunities for Mitra Pinasthika and Energi Mega

-0.5

Correlation Coefficient

Mitra Pinasthika  Energi Mega

Very good diversification

The 3 months correlation between Mitra and Energi is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Mitra Pinasthika Mustika and Energi Mega Persada in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Energi Mega Persada 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 Energi Mega. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Energi Mega Persada has no effect on the direction of Mitra Pinasthika i.e., Mitra Pinasthika and Energi Mega go up and down completely randomly.

Pair Corralation between Mitra Pinasthika and Energi Mega

Assuming the 90 days trading horizon Mitra Pinasthika Mustika is expected to under-perform the Energi Mega. But the stock apears to be less risky and, when comparing its historical volatility, Mitra Pinasthika Mustika is 8.28 times less risky than Energi Mega. The stock trades about -0.1 of its potential returns per unit of risk. The Energi Mega Persada is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  20,200  in Energi Mega Persada on September 4, 2024 and sell it today you would earn a total of  3,400  from holding Energi Mega Persada or generate 16.83% return on investment over 90 days.

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

Mitra Pinasthika Mustika  vs.  Energi Mega Persada

Mitra Pinasthika Mustika

Risk-Adjusted Performance

0 of 100

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.

Energi Mega Persada

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Energi Mega Persada are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Energi Mega disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Mitra Pinasthika and Energi Mega

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

The idea behind Mitra Pinasthika Mustika and Energi Mega Persada 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.