Correlation Between Bima Sakti and Mnc Land

Can any of the company-specific risk be diversified away by investing in both Bima Sakti and Mnc Land 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 Bima Sakti and Mnc Land into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Bima Sakti Pertiwi and Mnc Land Tbk, you can compare the effects of market volatilities on Bima Sakti and Mnc Land 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 Bima Sakti with a short position of Mnc Land. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bima Sakti and Mnc Land.

Diversification Opportunities for Bima Sakti and Mnc Land

-0.62

Correlation Coefficient

Bima Sakti  Mnc Land

Excellent diversification

The 3 months correlation between Bima and Mnc is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Bima Sakti Pertiwi and Mnc Land Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mnc Land Tbk and Bima Sakti 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 Bima Sakti Pertiwi are associated (or correlated) with Mnc Land. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mnc Land Tbk has no effect on the direction of Bima Sakti i.e., Bima Sakti and Mnc Land go up and down completely randomly.

Pair Corralation between Bima Sakti and Mnc Land

Assuming the 90 days trading horizon Bima Sakti Pertiwi is expected to generate 0.38 times more return on investment than Mnc Land. However, Bima Sakti Pertiwi is 2.62 times less risky than Mnc Land. It trades about 0.03 of its potential returns per unit of risk. Mnc Land Tbk is currently generating about -0.04 per unit of risk. If you would invest  5,100  in Bima Sakti Pertiwi on November 29, 2024 and sell it today you would earn a total of  100.00  from holding Bima Sakti Pertiwi or generate 1.96% return on investment over 90 days.

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

Bima Sakti Pertiwi  vs.  Mnc Land Tbk

Bima Sakti Pertiwi

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Bima Sakti Pertiwi are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent forward-looking signals, Bima Sakti is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Mnc Land Tbk

Risk-Adjusted Performance

Very Weak

Over the last 90 days Mnc Land Tbk 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 Bima Sakti and Mnc Land

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

The idea behind Bima Sakti Pertiwi and Mnc Land Tbk 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.