Correlation Between Pelita Samudera and Makmur Berkah

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

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

Diversification Opportunities for Pelita Samudera and Makmur Berkah

0.77

Correlation Coefficient

Pelita Samudera  Makmur Berkah

Poor diversification

The 3 months correlation between Pelita and Makmur is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Pelita Samudera Shipping 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 Pelita Samudera 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 Pelita Samudera Shipping 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 Pelita Samudera i.e., Pelita Samudera and Makmur Berkah go up and down completely randomly.

Pair Corralation between Pelita Samudera and Makmur Berkah

Assuming the 90 days trading horizon Pelita Samudera Shipping is expected to generate 1.12 times more return on investment than Makmur Berkah. However, Pelita Samudera is 1.12 times more volatile than Makmur Berkah Amanda. It trades about 0.19 of its potential returns per unit of risk. Makmur Berkah Amanda is currently generating about -0.08 per unit of risk. If you would invest  40,000  in Pelita Samudera Shipping on October 26, 2024 and sell it today you would earn a total of  1,000.00  from holding Pelita Samudera Shipping or generate 2.5% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	94.74%
Values	Daily Returns

Pelita Samudera Shipping  vs.  Makmur Berkah Amanda

Pelita Samudera Shipping

Risk-Adjusted Performance

0 of 100

Very Weak

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

Makmur Berkah Amanda

Risk-Adjusted Performance

0 of 100

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 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 Pelita Samudera and Makmur Berkah

The main advantage of trading using opposite Pelita Samudera and Makmur Berkah positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pelita Samudera 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 Pelita Samudera Shipping 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 Transaction History module to view history of all your transactions and understand their impact on performance.