Correlation Between Centratama Telekomunikasi and Mahaka Media
Can any of the company-specific risk be diversified away by investing in both Centratama Telekomunikasi and Mahaka Media 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 Centratama Telekomunikasi and Mahaka Media into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Centratama Telekomunikasi Ind and Mahaka Media Tbk, you can compare the effects of market volatilities on Centratama Telekomunikasi and Mahaka Media 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 Centratama Telekomunikasi with a short position of Mahaka Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of Centratama Telekomunikasi and Mahaka Media.
Diversification Opportunities for Centratama Telekomunikasi and Mahaka Media
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Centratama and Mahaka is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Centratama Telekomunikasi Ind and Mahaka Media Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mahaka Media Tbk and Centratama Telekomunikasi 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 Centratama Telekomunikasi Ind are associated (or correlated) with Mahaka Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mahaka Media Tbk has no effect on the direction of Centratama Telekomunikasi i.e., Centratama Telekomunikasi and Mahaka Media go up and down completely randomly.
Pair Corralation between Centratama Telekomunikasi and Mahaka Media
Assuming the 90 days trading horizon Centratama Telekomunikasi Ind is expected to generate 0.84 times more return on investment than Mahaka Media. However, Centratama Telekomunikasi Ind is 1.19 times less risky than Mahaka Media. It trades about -0.03 of its potential returns per unit of risk. Mahaka Media Tbk is currently generating about -0.23 per unit of risk. If you would invest 4,600 in Centratama Telekomunikasi Ind on November 3, 2024 and sell it today you would lose (100.00) from holding Centratama Telekomunikasi Ind or give up 2.17% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Centratama Telekomunikasi Ind vs. Mahaka Media Tbk
Performance |
| Timeline |
| Centratama Telekomunikasi |
| Mahaka Media Tbk |
Centratama Telekomunikasi and Mahaka Media Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Centratama Telekomunikasi and Mahaka Media
The main advantage of trading using opposite Centratama Telekomunikasi and Mahaka Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Centratama Telekomunikasi position performs unexpectedly, Mahaka Media 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 Mahaka Media will offset losses from the drop in Mahaka Media's long position.The idea behind Centratama Telekomunikasi Ind and Mahaka Media Tbk 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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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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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