Correlation Between PT Temas and Mitra Energi

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

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

Diversification Opportunities for PT Temas and Mitra Energi

-0.26

Correlation Coefficient

PT Temas  Mitra Energi

Very good diversification

The 3 months correlation between TMAS and Mitra is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding PT Temas 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 PT Temas 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 PT Temas 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 PT Temas i.e., PT Temas and Mitra Energi go up and down completely randomly.

Pair Corralation between PT Temas and Mitra Energi

Assuming the 90 days trading horizon PT Temas Tbk is expected to under-perform the Mitra Energi. But the stock apears to be less risky and, when comparing its historical volatility, PT Temas Tbk is 2.35 times less risky than Mitra Energi. The stock trades about -0.06 of its potential returns per unit of risk. The Mitra Energi Persada is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  63,000  in Mitra Energi Persada on October 25, 2024 and sell it today you would earn a total of  10,000  from holding Mitra Energi Persada or generate 15.87% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.33%
Values	Daily Returns

PT Temas Tbk  vs.  Mitra Energi Persada

PT Temas Tbk

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PT Temas 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.

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 PT Temas and Mitra Energi

The main advantage of trading using opposite PT Temas and Mitra Energi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PT Temas 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 PT Temas 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.

Check out your portfolio center.

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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.