Correlation Between PT MNC and Bhuwanatala Indah
Can any of the company-specific risk be diversified away by investing in both PT MNC and Bhuwanatala Indah 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 PT MNC and Bhuwanatala Indah into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PT MNC Energy and Bhuwanatala Indah Permai, you can compare the effects of market volatilities on PT MNC and Bhuwanatala Indah 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 PT MNC with a short position of Bhuwanatala Indah. Check out your portfolio center. Please also check ongoing floating volatility patterns of PT MNC and Bhuwanatala Indah.
Diversification Opportunities for PT MNC and Bhuwanatala Indah
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between IATA and Bhuwanatala is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding PT MNC Energy and Bhuwanatala Indah Permai in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bhuwanatala Indah Permai and PT MNC 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 PT MNC Energy are associated (or correlated) with Bhuwanatala Indah. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bhuwanatala Indah Permai has no effect on the direction of PT MNC i.e., PT MNC and Bhuwanatala Indah go up and down completely randomly.
Pair Corralation between PT MNC and Bhuwanatala Indah
Assuming the 90 days trading horizon PT MNC Energy is expected to generate 1.19 times more return on investment than Bhuwanatala Indah. However, PT MNC is 1.19 times more volatile than Bhuwanatala Indah Permai. It trades about 0.15 of its potential returns per unit of risk. Bhuwanatala Indah Permai is currently generating about 0.01 per unit of risk. If you would invest 4,000 in PT MNC Energy on August 27, 2024 and sell it today you would earn a total of 400.00 from holding PT MNC Energy or generate 10.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
PT MNC Energy vs. Bhuwanatala Indah Permai
Performance |
| Timeline |
| PT MNC Energy |
| Bhuwanatala Indah Permai |
PT MNC and Bhuwanatala Indah Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PT MNC and Bhuwanatala Indah
The main advantage of trading using opposite PT MNC and Bhuwanatala Indah positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PT MNC position performs unexpectedly, Bhuwanatala Indah 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 Bhuwanatala Indah will offset losses from the drop in Bhuwanatala Indah's long position.The idea behind PT MNC Energy and Bhuwanatala Indah Permai 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.| Bhuwanatala Indah vs. Duta Anggada Realty | Bhuwanatala Indah vs. Bukit Darmo Property | Bhuwanatala Indah vs. Duta Pertiwi Tbk | Bhuwanatala Indah vs. Bintang Mitra Semestaraya |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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