Correlation Between Maskapai Reasuransi and Equity Development

Can any of the company-specific risk be diversified away by investing in both Maskapai Reasuransi and Equity Development 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 Equity Development 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 Equity Development Investment, you can compare the effects of market volatilities on Maskapai Reasuransi and Equity Development 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 Equity Development. Check out your portfolio center. Please also check ongoing floating volatility patterns of Maskapai Reasuransi and Equity Development.

Diversification Opportunities for Maskapai Reasuransi and Equity Development

-0.17

Correlation Coefficient

Maskapai Reasuransi  Equity Development

Good diversification

The 3 months correlation between Maskapai and Equity is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Maskapai Reasuransi Indonesia and Equity Development Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Equity Development 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 Equity Development. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Equity Development has no effect on the direction of Maskapai Reasuransi i.e., Maskapai Reasuransi and Equity Development go up and down completely randomly.

Pair Corralation between Maskapai Reasuransi and Equity Development

Assuming the 90 days trading horizon Maskapai Reasuransi Indonesia is expected to under-perform the Equity Development. In addition to that, Maskapai Reasuransi is 1.3 times more volatile than Equity Development Investment. It trades about -0.01 of its total potential returns per unit of risk. Equity Development Investment is currently generating about 0.04 per unit of volatility. If you would invest  5,000  in Equity Development Investment on September 30, 2024 and sell it today you would earn a total of  500.00  from holding Equity Development Investment or generate 10.0% return on investment over 90 days.

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

Maskapai Reasuransi Indonesia  vs.  Equity Development Investment

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 conflicting performance in the last few months, the Stock's forward-looking signals remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Equity Development

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Equity Development Investment are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Equity Development may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Maskapai Reasuransi and Equity Development

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

The idea behind Maskapai Reasuransi Indonesia and Equity Development Investment 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.