Correlation Between Ramayana Lestari and Mitra Adiperkasa

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

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

Diversification Opportunities for Ramayana Lestari and Mitra Adiperkasa

0.65

Correlation Coefficient

Ramayana Lestari  Mitra Adiperkasa

Poor diversification

The 3 months correlation between Ramayana and Mitra is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Ramayana Lestari Sentosa and Mitra Adiperkasa Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mitra Adiperkasa Tbk and Ramayana Lestari 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 Ramayana Lestari Sentosa are associated (or correlated) with Mitra Adiperkasa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mitra Adiperkasa Tbk has no effect on the direction of Ramayana Lestari i.e., Ramayana Lestari and Mitra Adiperkasa go up and down completely randomly.

Pair Corralation between Ramayana Lestari and Mitra Adiperkasa

Assuming the 90 days trading horizon Ramayana Lestari Sentosa is expected to under-perform the Mitra Adiperkasa. But the stock apears to be less risky and, when comparing its historical volatility, Ramayana Lestari Sentosa is 3.27 times less risky than Mitra Adiperkasa. The stock trades about -0.12 of its potential returns per unit of risk. The Mitra Adiperkasa Tbk is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  150,000  in Mitra Adiperkasa Tbk on September 2, 2024 and sell it today you would earn a total of  7,500  from holding Mitra Adiperkasa Tbk or generate 5.0% return on investment over 90 days.

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

Ramayana Lestari Sentosa  vs.  Mitra Adiperkasa Tbk

Ramayana Lestari Sentosa

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ramayana Lestari Sentosa 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.

Mitra Adiperkasa Tbk

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Mitra Adiperkasa Tbk are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Mitra Adiperkasa may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Ramayana Lestari and Mitra Adiperkasa

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

The idea behind Ramayana Lestari Sentosa and Mitra Adiperkasa 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.