Correlation Between Rukun Raharja and Mitra Energi

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

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

Diversification Opportunities for Rukun Raharja and Mitra Energi

0.33

Correlation Coefficient

Rukun Raharja  Mitra Energi

Weak diversification

The 3 months correlation between Rukun and Mitra is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Rukun Raharja Tbk 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 Rukun Raharja 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 Rukun Raharja Tbk 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 Rukun Raharja i.e., Rukun Raharja and Mitra Energi go up and down completely randomly.

Pair Corralation between Rukun Raharja and Mitra Energi

Assuming the 90 days trading horizon Rukun Raharja Tbk is expected to generate 1.41 times more return on investment than Mitra Energi. However, Rukun Raharja is 1.41 times more volatile than Mitra Energi Persada. It trades about 0.27 of its potential returns per unit of risk. Mitra Energi Persada is currently generating about 0.08 per unit of risk. If you would invest  175,000  in Rukun Raharja Tbk on October 25, 2024 and sell it today you would earn a total of  248,000  from holding Rukun Raharja Tbk or generate 141.71% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.33%
Values	Daily Returns

Rukun Raharja Tbk  vs.  Mitra Energi Persada

Rukun Raharja Tbk

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Rukun Raharja Tbk are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Rukun Raharja disclosed solid returns over the last few months and may actually be approaching a breakup point.

Mitra Energi Persada

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Mitra Energi Persada are ranked lower than 6 (%) 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 Rukun Raharja and Mitra Energi

The main advantage of trading using opposite Rukun Raharja and Mitra Energi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rukun Raharja 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 Rukun Raharja Tbk 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.