Correlation Between Rig Tenders and Mitra Energi

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

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

Diversification Opportunities for Rig Tenders and Mitra Energi

0.15

Correlation Coefficient

Rig Tenders  Mitra Energi

Average diversification

The 3 months correlation between Rig and Mitra is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Rig Tenders 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 Rig Tenders 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 Rig Tenders 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 Rig Tenders i.e., Rig Tenders and Mitra Energi go up and down completely randomly.

Pair Corralation between Rig Tenders and Mitra Energi

Assuming the 90 days trading horizon Rig Tenders Tbk is expected to generate 2.66 times more return on investment than Mitra Energi. However, Rig Tenders is 2.66 times more volatile than Mitra Energi Persada. It trades about 0.01 of its potential returns per unit of risk. Mitra Energi Persada is currently generating about -0.17 per unit of risk. If you would invest  85,500  in Rig Tenders Tbk on October 10, 2024 and sell it today you would lose (1,000.00) from holding Rig Tenders Tbk or give up 1.17% of portfolio value over 90 days.

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

Rig Tenders Tbk  vs.  Mitra Energi Persada

Rig Tenders Tbk

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Rig Tenders Tbk are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Rig Tenders disclosed solid returns over the last few months and may actually be approaching a breakup point.

Mitra Energi Persada

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Rig Tenders and Mitra Energi

The main advantage of trading using opposite Rig Tenders and Mitra Energi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rig Tenders 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 Rig Tenders 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.