Correlation Between Communication Cable and MD Pictures
Can any of the company-specific risk be diversified away by investing in both Communication Cable and MD Pictures 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 Communication Cable and MD Pictures into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Communication Cable Systems and MD Pictures Tbk, you can compare the effects of market volatilities on Communication Cable and MD Pictures 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 Communication Cable with a short position of MD Pictures. Check out your portfolio center. Please also check ongoing floating volatility patterns of Communication Cable and MD Pictures.
Diversification Opportunities for Communication Cable and MD Pictures
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Communication and FILM is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Communication Cable Systems and MD Pictures Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MD Pictures Tbk and Communication Cable 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 Communication Cable Systems are associated (or correlated) with MD Pictures. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MD Pictures Tbk has no effect on the direction of Communication Cable i.e., Communication Cable and MD Pictures go up and down completely randomly.
Pair Corralation between Communication Cable and MD Pictures
Assuming the 90 days trading horizon Communication Cable Systems is expected to generate 1.44 times more return on investment than MD Pictures. However, Communication Cable is 1.44 times more volatile than MD Pictures Tbk. It trades about 0.12 of its potential returns per unit of risk. MD Pictures Tbk is currently generating about 0.15 per unit of risk. If you would invest 24,600 in Communication Cable Systems on August 27, 2024 and sell it today you would earn a total of 3,200 from holding Communication Cable Systems or generate 13.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Communication Cable Systems vs. MD Pictures Tbk
Performance |
| Timeline |
| Communication Cable |
| MD Pictures Tbk |
Communication Cable and MD Pictures Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Communication Cable and MD Pictures
The main advantage of trading using opposite Communication Cable and MD Pictures positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Communication Cable position performs unexpectedly, MD Pictures 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 MD Pictures will offset losses from the drop in MD Pictures' long position.| Communication Cable vs. Hartadinata Abadi Tbk | Communication Cable vs. Estika Tata Tiara | Communication Cable vs. Garudafood Putra Putri | Communication Cable vs. PT Indonesia Kendaraan |
| MD Pictures vs. MNC Studios International | MD Pictures vs. Elang Mahkota Teknologi | MD Pictures vs. Medikaloka Hermina PT | MD Pictures vs. Surya Esa Perkasa |
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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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