Correlation Between Optima Prima and Mitra Energi

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

By analyzing existing cross correlation between Optima Prima Metal and Mitra Energi Persada, you can compare the effects of market volatilities on Optima Prima and Mitra Energi 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 Optima Prima with a short position of Mitra Energi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Optima Prima and Mitra Energi.

Diversification Opportunities for Optima Prima and Mitra Energi

-0.27

Correlation Coefficient

Optima Prima  Mitra Energi

Very good diversification

The 3 months correlation between Optima and Mitra is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Optima Prima Metal and Mitra Energi Persada in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mitra Energi Persada and Optima Prima 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 Optima Prima Metal are associated (or correlated) with Mitra Energi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mitra Energi Persada has no effect on the direction of Optima Prima i.e., Optima Prima and Mitra Energi go up and down completely randomly.

Pair Corralation between Optima Prima and Mitra Energi

Assuming the 90 days trading horizon Optima Prima is expected to generate 218.44 times less return on investment than Mitra Energi. But when comparing it to its historical volatility, Optima Prima Metal is 4.71 times less risky than Mitra Energi. It trades about 0.0 of its potential returns per unit of risk. Mitra Energi Persada is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  58,500  in Mitra Energi Persada on December 21, 2024 and sell it today you would earn a total of  35,000  from holding Mitra Energi Persada or generate 59.83% return on investment over 90 days.

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

Optima Prima Metal  vs.  Mitra Energi Persada

Optima Prima Metal

Risk-Adjusted Performance

Very Weak

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

Mitra Energi Persada

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Mitra Energi Persada are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Mitra Energi disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Optima Prima and Mitra Energi

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

The idea behind Optima Prima Metal and Mitra Energi Persada 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.