Correlation Between Protech Mitra and PT Estee

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

By analyzing existing cross correlation between Protech Mitra Perkasa and PT Estee Gold, you can compare the effects of market volatilities on Protech Mitra and PT Estee 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 Protech Mitra with a short position of PT Estee. Check out your portfolio center. Please also check ongoing floating volatility patterns of Protech Mitra and PT Estee.

Diversification Opportunities for Protech Mitra and PT Estee

-0.66

Correlation Coefficient

Protech Mitra  PT Estee

Excellent diversification

The 3 months correlation between Protech and EURO is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Protech Mitra Perkasa and PT Estee Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PT Estee Gold and Protech Mitra 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 Protech Mitra Perkasa are associated (or correlated) with PT Estee. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PT Estee Gold has no effect on the direction of Protech Mitra i.e., Protech Mitra and PT Estee go up and down completely randomly.

Pair Corralation between Protech Mitra and PT Estee

Assuming the 90 days trading horizon Protech Mitra Perkasa is expected to under-perform the PT Estee. But the stock apears to be less risky and, when comparing its historical volatility, Protech Mitra Perkasa is 2.47 times less risky than PT Estee. The stock trades about -0.1 of its potential returns per unit of risk. The PT Estee Gold is currently generating about 0.63 of returns per unit of risk over similar time horizon. If you would invest  9,400  in PT Estee Gold on October 25, 2024 and sell it today you would earn a total of  9,100  from holding PT Estee Gold or generate 96.81% return on investment over 90 days.

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

Protech Mitra Perkasa  vs.  PT Estee Gold

Protech Mitra Perkasa

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Protech Mitra Perkasa has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Protech Mitra is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

PT Estee Gold

Risk-Adjusted Performance

2 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in PT Estee Gold are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, PT Estee may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Protech Mitra and PT Estee

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

The idea behind Protech Mitra Perkasa and PT Estee Gold 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.