Correlation Between MAROC TELECOM and PT Hexindo

Can any of the company-specific risk be diversified away by investing in both MAROC TELECOM and PT Hexindo 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 MAROC TELECOM and PT Hexindo into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between MAROC TELECOM and PT Hexindo Adiperkasa, you can compare the effects of market volatilities on MAROC TELECOM and PT Hexindo 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 MAROC TELECOM with a short position of PT Hexindo. Check out your portfolio center. Please also check ongoing floating volatility patterns of MAROC TELECOM and PT Hexindo.

Diversification Opportunities for MAROC TELECOM and PT Hexindo

0.55

Correlation Coefficient

MAROC TELECOM  PT Hexindo

Very weak diversification

The 3 months correlation between MAROC and HX1A is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding MAROC TELECOM and PT Hexindo Adiperkasa in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PT Hexindo Adiperkasa and MAROC TELECOM 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 MAROC TELECOM are associated (or correlated) with PT Hexindo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PT Hexindo Adiperkasa has no effect on the direction of MAROC TELECOM i.e., MAROC TELECOM and PT Hexindo go up and down completely randomly.

Pair Corralation between MAROC TELECOM and PT Hexindo

Assuming the 90 days trading horizon MAROC TELECOM is expected to generate 0.21 times more return on investment than PT Hexindo. However, MAROC TELECOM is 4.76 times less risky than PT Hexindo. It trades about -0.01 of its potential returns per unit of risk. PT Hexindo Adiperkasa is currently generating about -0.04 per unit of risk. If you would invest  770.00  in MAROC TELECOM on October 5, 2024 and sell it today you would lose (5.00) from holding MAROC TELECOM or give up 0.65% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.33%
Values	Daily Returns

MAROC TELECOM  vs.  PT Hexindo Adiperkasa

MAROC TELECOM

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MAROC TELECOM has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, MAROC TELECOM is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

PT Hexindo Adiperkasa

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PT Hexindo Adiperkasa has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with MAROC TELECOM and PT Hexindo

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

The idea behind MAROC TELECOM and PT Hexindo Adiperkasa 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.