Correlation Between Transcoal Pacific and Makmur Berkah

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

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

Diversification Opportunities for Transcoal Pacific and Makmur Berkah

0.06

Correlation Coefficient

Transcoal Pacific  Makmur Berkah

Significant diversification

The 3 months correlation between Transcoal and Makmur is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Transcoal Pacific Tbk 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 Transcoal Pacific 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 Transcoal Pacific Tbk 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 Transcoal Pacific i.e., Transcoal Pacific and Makmur Berkah go up and down completely randomly.

Pair Corralation between Transcoal Pacific and Makmur Berkah

Assuming the 90 days trading horizon Transcoal Pacific Tbk is expected to under-perform the Makmur Berkah. In addition to that, Transcoal Pacific is 1.8 times more volatile than Makmur Berkah Amanda. It trades about -0.11 of its total potential returns per unit of risk. Makmur Berkah Amanda is currently generating about -0.1 per unit of volatility. If you would invest  10,200  in Makmur Berkah Amanda on December 23, 2024 and sell it today you would lose (600.00) from holding Makmur Berkah Amanda or give up 5.88% of portfolio value over 90 days.

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

Transcoal Pacific Tbk  vs.  Makmur Berkah Amanda

Transcoal Pacific Tbk

Risk-Adjusted Performance

Very Weak

Over the last 90 days Transcoal Pacific Tbk 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.

Makmur Berkah Amanda

Risk-Adjusted Performance

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 quite persistent forward-looking signals, Makmur Berkah 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 Transcoal Pacific and Makmur Berkah

The main advantage of trading using opposite Transcoal Pacific and Makmur Berkah positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Transcoal Pacific 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 Transcoal Pacific Tbk 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.