Correlation Between Malacca Trust and Maskapai Reasuransi

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

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

Diversification Opportunities for Malacca Trust and Maskapai Reasuransi

0.08

Correlation Coefficient

Malacca Trust  Maskapai Reasuransi

Significant diversification

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

Pair Corralation between Malacca Trust and Maskapai Reasuransi

Assuming the 90 days trading horizon Malacca Trust Wuwungan is expected to under-perform the Maskapai Reasuransi. But the stock apears to be less risky and, when comparing its historical volatility, Malacca Trust Wuwungan is 2.36 times less risky than Maskapai Reasuransi. The stock trades about -0.27 of its potential returns per unit of risk. The Maskapai Reasuransi Indonesia is currently generating about -0.09 of returns per unit of risk over similar time horizon. If you would invest  94,500  in Maskapai Reasuransi Indonesia on October 12, 2024 and sell it today you would lose (4,500) from holding Maskapai Reasuransi Indonesia or give up 4.76% of portfolio value over 90 days.

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

Malacca Trust Wuwungan  vs.  Maskapai Reasuransi Indonesia

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.

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.

Pair Trading with Malacca Trust and Maskapai Reasuransi

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

The idea behind Malacca Trust Wuwungan and Maskapai Reasuransi Indonesia 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.