Correlation Between Maskapai Reasuransi and Asuransi Dayin

Can any of the company-specific risk be diversified away by investing in both Maskapai Reasuransi and Asuransi Dayin 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 Maskapai Reasuransi and Asuransi Dayin into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Maskapai Reasuransi Indonesia and Asuransi Dayin Mitra, you can compare the effects of market volatilities on Maskapai Reasuransi and Asuransi Dayin 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 Maskapai Reasuransi with a short position of Asuransi Dayin. Check out your portfolio center. Please also check ongoing floating volatility patterns of Maskapai Reasuransi and Asuransi Dayin.

Diversification Opportunities for Maskapai Reasuransi and Asuransi Dayin

0.43

Correlation Coefficient

Maskapai Reasuransi  Asuransi Dayin

Very weak diversification

The 3 months correlation between Maskapai and Asuransi is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Maskapai Reasuransi Indonesia and Asuransi Dayin Mitra in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asuransi Dayin Mitra and Maskapai Reasuransi 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 Maskapai Reasuransi Indonesia are associated (or correlated) with Asuransi Dayin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Asuransi Dayin Mitra has no effect on the direction of Maskapai Reasuransi i.e., Maskapai Reasuransi and Asuransi Dayin go up and down completely randomly.

Pair Corralation between Maskapai Reasuransi and Asuransi Dayin

Assuming the 90 days trading horizon Maskapai Reasuransi Indonesia is expected to under-perform the Asuransi Dayin. In addition to that, Maskapai Reasuransi is 2.07 times more volatile than Asuransi Dayin Mitra. It trades about -0.05 of its total potential returns per unit of risk. Asuransi Dayin Mitra is currently generating about 0.03 per unit of volatility. If you would invest  43,083  in Asuransi Dayin Mitra on September 12, 2024 and sell it today you would earn a total of  6,117  from holding Asuransi Dayin Mitra or generate 14.2% return on investment over 90 days.

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

Maskapai Reasuransi Indonesia  vs.  Asuransi Dayin Mitra

Maskapai Reasuransi

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Maskapai Reasuransi Indonesia 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.

Asuransi Dayin Mitra

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Asuransi Dayin Mitra has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Asuransi Dayin 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 Maskapai Reasuransi and Asuransi Dayin

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

The idea behind Maskapai Reasuransi Indonesia and Asuransi Dayin Mitra 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.