Correlation Between Ancora Indonesia and Makmur Berkah

Can any of the company-specific risk be diversified away by investing in both Ancora Indonesia and Makmur Berkah 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 Ancora Indonesia and Makmur Berkah into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Ancora Indonesia Resources and Makmur Berkah Amanda, you can compare the effects of market volatilities on Ancora Indonesia and Makmur Berkah 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 Ancora Indonesia with a short position of Makmur Berkah. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ancora Indonesia and Makmur Berkah.

Diversification Opportunities for Ancora Indonesia and Makmur Berkah

-0.03

Correlation Coefficient

Ancora Indonesia  Makmur Berkah

Good diversification

The 3 months correlation between Ancora and Makmur is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Ancora Indonesia Resources and Makmur Berkah Amanda in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Makmur Berkah Amanda and Ancora Indonesia 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 Ancora Indonesia Resources are associated (or correlated) with Makmur Berkah. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Makmur Berkah Amanda has no effect on the direction of Ancora Indonesia i.e., Ancora Indonesia and Makmur Berkah go up and down completely randomly.

Pair Corralation between Ancora Indonesia and Makmur Berkah

Assuming the 90 days trading horizon Ancora Indonesia Resources is expected to generate 2.31 times more return on investment than Makmur Berkah. However, Ancora Indonesia is 2.31 times more volatile than Makmur Berkah Amanda. It trades about 0.01 of its potential returns per unit of risk. Makmur Berkah Amanda is currently generating about -0.07 per unit of risk. If you would invest  9,800  in Ancora Indonesia Resources on December 21, 2024 and sell it today you would earn a total of  0.00  from holding Ancora Indonesia Resources or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.28%
Values	Daily Returns

Ancora Indonesia Resources  vs.  Makmur Berkah Amanda

Ancora Indonesia Res

Risk-Adjusted Performance

Very Weak

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

Makmur Berkah Amanda

Risk-Adjusted Performance

Very Weak

Over the last 90 days Makmur Berkah Amanda has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Makmur Berkah 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 Ancora Indonesia and Makmur Berkah

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

The idea behind Ancora Indonesia Resources and Makmur Berkah Amanda 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 Anywhere module to track or share privately all of your investments from the convenience of any device.