Correlation Between Metro Healthcare and Inocycle Technology
Can any of the company-specific risk be diversified away by investing in both Metro Healthcare and Inocycle Technology 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 Metro Healthcare and Inocycle Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Metro Healthcare Indonesia and Inocycle Technology Tbk, you can compare the effects of market volatilities on Metro Healthcare and Inocycle Technology 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 Metro Healthcare with a short position of Inocycle Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Metro Healthcare and Inocycle Technology.
Diversification Opportunities for Metro Healthcare and Inocycle Technology
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Metro and Inocycle is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Metro Healthcare Indonesia and Inocycle Technology Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inocycle Technology Tbk and Metro Healthcare 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 Metro Healthcare Indonesia are associated (or correlated) with Inocycle Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inocycle Technology Tbk has no effect on the direction of Metro Healthcare i.e., Metro Healthcare and Inocycle Technology go up and down completely randomly.
Pair Corralation between Metro Healthcare and Inocycle Technology
Assuming the 90 days trading horizon Metro Healthcare Indonesia is expected to generate 1.7 times more return on investment than Inocycle Technology. However, Metro Healthcare is 1.7 times more volatile than Inocycle Technology Tbk. It trades about 0.42 of its potential returns per unit of risk. Inocycle Technology Tbk is currently generating about -0.07 per unit of risk. If you would invest 13,000 in Metro Healthcare Indonesia on September 2, 2024 and sell it today you would earn a total of 4,100 from holding Metro Healthcare Indonesia or generate 31.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Metro Healthcare Indonesia vs. Inocycle Technology Tbk
Performance |
| Timeline |
| Metro Healthcare Ind |
| Inocycle Technology Tbk |
Metro Healthcare and Inocycle Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Metro Healthcare and Inocycle Technology
The main advantage of trading using opposite Metro Healthcare and Inocycle Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Metro Healthcare position performs unexpectedly, Inocycle Technology 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 Inocycle Technology will offset losses from the drop in Inocycle Technology's long position.| Metro Healthcare vs. Medikaloka Hermina PT | Metro Healthcare vs. Sarana Meditama Metropolitan | Metro Healthcare vs. Mitra Keluarga Karyasehat | Metro Healthcare vs. Bhakti Multi Artha |
| Inocycle Technology vs. MNC Vision Networks | Inocycle Technology vs. Hartadinata Abadi Tbk | Inocycle Technology vs. Kencana Energi Lestari | Inocycle Technology vs. Bali Bintang Sejahtera |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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