Correlation Between Mitra Pinasthika and PT Sarimelati

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

Diversification Opportunities for Mitra Pinasthika and PT Sarimelati

-0.64

Correlation Coefficient

Mitra Pinasthika  PT Sarimelati

Excellent diversification

The 3 months correlation between Mitra and PZZA is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Mitra Pinasthika Mustika and PT Sarimelati Kencana in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PT Sarimelati Kencana 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 PT Sarimelati. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PT Sarimelati Kencana has no effect on the direction of Mitra Pinasthika i.e., Mitra Pinasthika and PT Sarimelati go up and down completely randomly.

Pair Corralation between Mitra Pinasthika and PT Sarimelati

Assuming the 90 days trading horizon Mitra Pinasthika Mustika is expected to generate 0.37 times more return on investment than PT Sarimelati. However, Mitra Pinasthika Mustika is 2.7 times less risky than PT Sarimelati. It trades about 0.01 of its potential returns per unit of risk. PT Sarimelati Kencana is currently generating about -0.07 per unit of risk. If you would invest  89,215  in Mitra Pinasthika Mustika on December 4, 2024 and sell it today you would earn a total of  2,785  from holding Mitra Pinasthika Mustika or generate 3.12% return on investment over 90 days.

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

Mitra Pinasthika Mustika  vs.  PT Sarimelati Kencana

Mitra Pinasthika Mustika

Risk-Adjusted Performance

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 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.

PT Sarimelati Kencana

Risk-Adjusted Performance

Modest

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

Pair Trading with Mitra Pinasthika and PT Sarimelati

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

The idea behind Mitra Pinasthika Mustika and PT Sarimelati Kencana 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.