Correlation Between Maskapai Reasuransi and Malacca Trust

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

Diversification Opportunities for Maskapai Reasuransi and Malacca Trust

0.08

Correlation Coefficient

Maskapai Reasuransi  Malacca Trust

Significant diversification

The 3 months correlation between Maskapai and Malacca is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Maskapai Reasuransi Indonesia and Malacca Trust Wuwungan in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Malacca Trust Wuwungan 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 Malacca Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Malacca Trust Wuwungan has no effect on the direction of Maskapai Reasuransi i.e., Maskapai Reasuransi and Malacca Trust go up and down completely randomly.

Pair Corralation between Maskapai Reasuransi and Malacca Trust

Assuming the 90 days trading horizon Maskapai Reasuransi Indonesia is expected to under-perform the Malacca Trust. In addition to that, Maskapai Reasuransi is 1.03 times more volatile than Malacca Trust Wuwungan. It trades about -0.04 of its total potential returns per unit of risk. Malacca Trust Wuwungan is currently generating about 0.13 per unit of volatility. If you would invest  7,300  in Malacca Trust Wuwungan on October 12, 2024 and sell it today you would earn a total of  8,200  from holding Malacca Trust Wuwungan or generate 112.33% return on investment over 90 days.

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

Maskapai Reasuransi Indonesia  vs.  Malacca Trust Wuwungan

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.

Malacca Trust Wuwungan

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Malacca Trust Wuwungan has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Malacca Trust 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 Malacca Trust

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

The idea behind Maskapai Reasuransi Indonesia and Malacca Trust Wuwungan 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 Commodity Directory module to find actively traded commodities issued by global exchanges.