Correlation Between Harum Energy and Medco Energi
Can any of the company-specific risk be diversified away by investing in both Harum Energy and Medco 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 Harum Energy and Medco Energi into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Harum Energy Tbk and Medco Energi Internasional, you can compare the effects of market volatilities on Harum Energy and Medco 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 Harum Energy with a short position of Medco Energi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Harum Energy and Medco Energi.
Diversification Opportunities for Harum Energy and Medco Energi
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Harum and Medco is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Harum Energy Tbk and Medco Energi Internasional in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Medco Energi Interna and Harum Energy 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 Harum Energy Tbk are associated (or correlated) with Medco Energi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Medco Energi Interna has no effect on the direction of Harum Energy i.e., Harum Energy and Medco Energi go up and down completely randomly.
Pair Corralation between Harum Energy and Medco Energi
Assuming the 90 days trading horizon Harum Energy Tbk is expected to generate 0.83 times more return on investment than Medco Energi. However, Harum Energy Tbk is 1.21 times less risky than Medco Energi. It trades about -0.2 of its potential returns per unit of risk. Medco Energi Internasional is currently generating about -0.17 per unit of risk. If you would invest 124,000 in Harum Energy Tbk on August 29, 2024 and sell it today you would lose (11,500) from holding Harum Energy Tbk or give up 9.27% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Harum Energy Tbk vs. Medco Energi Internasional
Performance |
| Timeline |
| Harum Energy Tbk |
| Medco Energi Interna |
Harum Energy and Medco Energi Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Harum Energy and Medco Energi
The main advantage of trading using opposite Harum Energy and Medco Energi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Harum Energy position performs unexpectedly, Medco 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 Medco Energi will offset losses from the drop in Medco Energi's long position.| Harum Energy vs. Indo Tambangraya Megah | Harum Energy vs. Indika Energy Tbk | Harum Energy vs. Adaro Energy Tbk | Harum Energy vs. Akr Corporindo Tbk |
| Medco Energi vs. Vale Indonesia Tbk | Medco Energi vs. Timah Persero Tbk | Medco Energi vs. Perusahaan Gas Negara | Medco Energi vs. Bukit Asam Tbk |
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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