Correlation Between Megapower Makmur and Meta Epsi

Can any of the company-specific risk be diversified away by investing in both Megapower Makmur and Meta Epsi 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 Megapower Makmur and Meta Epsi into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Megapower Makmur TBK and Meta Epsi Tbk, you can compare the effects of market volatilities on Megapower Makmur and Meta Epsi 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 Megapower Makmur with a short position of Meta Epsi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Megapower Makmur and Meta Epsi.

Diversification Opportunities for Megapower Makmur and Meta Epsi

0.1

Correlation Coefficient

Megapower Makmur  Meta Epsi

Average diversification

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

Pair Corralation between Megapower Makmur and Meta Epsi

Assuming the 90 days trading horizon Megapower Makmur TBK is expected to generate 1.13 times more return on investment than Meta Epsi. However, Megapower Makmur is 1.13 times more volatile than Meta Epsi Tbk. It trades about 0.03 of its potential returns per unit of risk. Meta Epsi Tbk is currently generating about 0.03 per unit of risk. If you would invest  9,100  in Megapower Makmur TBK on December 30, 2024 and sell it today you would earn a total of  200.00  from holding Megapower Makmur TBK or generate 2.2% return on investment over 90 days.

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

Megapower Makmur TBK  vs.  Meta Epsi Tbk

Megapower Makmur TBK

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Megapower Makmur TBK are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Megapower Makmur disclosed solid returns over the last few months and may actually be approaching a breakup point.

Meta Epsi Tbk

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Meta Epsi Tbk are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Meta Epsi may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Megapower Makmur and Meta Epsi

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

The idea behind Megapower Makmur TBK and Meta Epsi Tbk 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.