Correlation Between Mustika Ratu and Tempo Scan

Can any of the company-specific risk be diversified away by investing in both Mustika Ratu and Tempo Scan 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 Mustika Ratu and Tempo Scan into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Mustika Ratu Tbk and Tempo Scan Pacific, you can compare the effects of market volatilities on Mustika Ratu and Tempo Scan 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 Mustika Ratu with a short position of Tempo Scan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mustika Ratu and Tempo Scan.

Diversification Opportunities for Mustika Ratu and Tempo Scan

0.79

Correlation Coefficient

Mustika Ratu  Tempo Scan

Poor diversification

The 3 months correlation between Mustika and Tempo is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Mustika Ratu Tbk and Tempo Scan Pacific in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tempo Scan Pacific and Mustika Ratu 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 Mustika Ratu Tbk are associated (or correlated) with Tempo Scan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tempo Scan Pacific has no effect on the direction of Mustika Ratu i.e., Mustika Ratu and Tempo Scan go up and down completely randomly.

Pair Corralation between Mustika Ratu and Tempo Scan

Assuming the 90 days trading horizon Mustika Ratu Tbk is expected to under-perform the Tempo Scan. In addition to that, Mustika Ratu is 1.43 times more volatile than Tempo Scan Pacific. It trades about -0.31 of its total potential returns per unit of risk. Tempo Scan Pacific is currently generating about -0.04 per unit of volatility. If you would invest  255,000  in Tempo Scan Pacific on December 31, 2024 and sell it today you would lose (9,000) from holding Tempo Scan Pacific or give up 3.53% of portfolio value over 90 days.

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

Mustika Ratu Tbk  vs.  Tempo Scan Pacific

Mustika Ratu Tbk

Risk-Adjusted Performance

Very Weak

Over the last 90 days Mustika Ratu Tbk has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's forward-looking signals remain quite persistent which may send shares a bit higher in May 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Tempo Scan Pacific

Risk-Adjusted Performance

Very Weak

Over the last 90 days Tempo Scan Pacific has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Tempo Scan 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 Mustika Ratu and Tempo Scan

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

The idea behind Mustika Ratu Tbk and Tempo Scan Pacific 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.