Correlation Between Rig Tenders and Matahari Department

Can any of the company-specific risk be diversified away by investing in both Rig Tenders and Matahari Department 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 Matahari Department 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 Matahari Department Store, you can compare the effects of market volatilities on Rig Tenders and Matahari Department 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 Matahari Department. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rig Tenders and Matahari Department.

Diversification Opportunities for Rig Tenders and Matahari Department

-0.68

Correlation Coefficient

Rig Tenders  Matahari Department

Excellent diversification

The 3 months correlation between Rig and Matahari is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Rig Tenders Tbk and Matahari Department Store in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Matahari Department Store 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 Matahari Department. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Matahari Department Store has no effect on the direction of Rig Tenders i.e., Rig Tenders and Matahari Department go up and down completely randomly.

Pair Corralation between Rig Tenders and Matahari Department

Assuming the 90 days trading horizon Rig Tenders Tbk is expected to under-perform the Matahari Department. In addition to that, Rig Tenders is 2.19 times more volatile than Matahari Department Store. It trades about -0.08 of its total potential returns per unit of risk. Matahari Department Store is currently generating about 0.27 per unit of volatility. If you would invest  140,500  in Matahari Department Store on December 30, 2024 and sell it today you would earn a total of  52,000  from holding Matahari Department Store or generate 37.01% return on investment over 90 days.

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

Rig Tenders Tbk  vs.  Matahari Department Store

Rig Tenders Tbk

Risk-Adjusted Performance

Very Weak

Over the last 90 days Rig Tenders Tbk has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's forward-looking signals remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Matahari Department Store

Risk-Adjusted Performance

Solid

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

Pair Trading with Rig Tenders and Matahari Department

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

The idea behind Rig Tenders Tbk and Matahari Department Store 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..