Correlation Between PT MNC and Sentral Mitra
Can any of the company-specific risk be diversified away by investing in both PT MNC and Sentral Mitra 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 Sentral Mitra 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 Sentral Mitra Informatika, you can compare the effects of market volatilities on PT MNC and Sentral Mitra 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 Sentral Mitra. Check out your portfolio center. Please also check ongoing floating volatility patterns of PT MNC and Sentral Mitra.
Diversification Opportunities for PT MNC and Sentral Mitra
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between IATA and Sentral is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding PT MNC Energy and Sentral Mitra Informatika in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sentral Mitra Informatika 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 Sentral Mitra. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sentral Mitra Informatika has no effect on the direction of PT MNC i.e., PT MNC and Sentral Mitra go up and down completely randomly.
Pair Corralation between PT MNC and Sentral Mitra
Assuming the 90 days trading horizon PT MNC Energy is expected to generate 0.61 times more return on investment than Sentral Mitra. However, PT MNC Energy is 1.64 times less risky than Sentral Mitra. It trades about 0.03 of its potential returns per unit of risk. Sentral Mitra Informatika is currently generating about -0.02 per unit of risk. If you would invest 4,300 in PT MNC Energy on August 28, 2024 and sell it today you would earn a total of 100.00 from holding PT MNC Energy or generate 2.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
PT MNC Energy vs. Sentral Mitra Informatika
Performance |
| Timeline |
| PT MNC Energy |
| Sentral Mitra Informatika |
PT MNC and Sentral Mitra Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PT MNC and Sentral Mitra
The main advantage of trading using opposite PT MNC and Sentral Mitra positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PT MNC position performs unexpectedly, Sentral Mitra 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 Sentral Mitra will offset losses from the drop in Sentral Mitra's long position.The idea behind PT MNC Energy and Sentral Mitra Informatika 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.| Sentral Mitra vs. PT Dewi Shri | Sentral Mitra vs. PT Arkora Hydro | Sentral Mitra vs. Habco Trans Maritima | Sentral Mitra vs. PT Jhonlin Agro |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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