Correlation Between MD Pictures and Smartfren Telecom
Can any of the company-specific risk be diversified away by investing in both MD Pictures and Smartfren Telecom 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 MD Pictures and Smartfren Telecom into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MD Pictures Tbk and Smartfren Telecom Tbk, you can compare the effects of market volatilities on MD Pictures and Smartfren Telecom 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 MD Pictures with a short position of Smartfren Telecom. Check out your portfolio center. Please also check ongoing floating volatility patterns of MD Pictures and Smartfren Telecom.
Diversification Opportunities for MD Pictures and Smartfren Telecom
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between FILM and Smartfren is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding MD Pictures Tbk and Smartfren Telecom Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Smartfren Telecom Tbk and MD Pictures 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 MD Pictures Tbk are associated (or correlated) with Smartfren Telecom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Smartfren Telecom Tbk has no effect on the direction of MD Pictures i.e., MD Pictures and Smartfren Telecom go up and down completely randomly.
Pair Corralation between MD Pictures and Smartfren Telecom
Assuming the 90 days trading horizon MD Pictures Tbk is expected to generate 1.71 times more return on investment than Smartfren Telecom. However, MD Pictures is 1.71 times more volatile than Smartfren Telecom Tbk. It trades about 0.19 of its potential returns per unit of risk. Smartfren Telecom Tbk is currently generating about -0.13 per unit of risk. If you would invest 310,000 in MD Pictures Tbk on August 27, 2024 and sell it today you would earn a total of 53,000 from holding MD Pictures Tbk or generate 17.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
MD Pictures Tbk vs. Smartfren Telecom Tbk
Performance |
| Timeline |
| MD Pictures Tbk |
| Smartfren Telecom Tbk |
MD Pictures and Smartfren Telecom Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MD Pictures and Smartfren Telecom
The main advantage of trading using opposite MD Pictures and Smartfren Telecom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MD Pictures position performs unexpectedly, Smartfren Telecom 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 Smartfren Telecom will offset losses from the drop in Smartfren Telecom's long position.| MD Pictures vs. MNC Studios International | MD Pictures vs. Elang Mahkota Teknologi | MD Pictures vs. Medikaloka Hermina PT | MD Pictures vs. Surya Esa Perkasa |
| Smartfren Telecom vs. Mnc Land Tbk | Smartfren Telecom vs. MNC Vision Networks | Smartfren Telecom vs. Medikaloka Hermina PT |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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