Correlation Between First Media and Global Mediacom
Can any of the company-specific risk be diversified away by investing in both First Media and Global Mediacom 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 First Media and Global Mediacom into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Media Tbk and Global Mediacom Tbk, you can compare the effects of market volatilities on First Media and Global Mediacom 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 First Media with a short position of Global Mediacom. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Media and Global Mediacom.
Diversification Opportunities for First Media and Global Mediacom
-0.88 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between First and Global is -0.88. Overlapping area represents the amount of risk that can be diversified away by holding First Media Tbk and Global Mediacom Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Mediacom Tbk and First Media 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 First Media Tbk are associated (or correlated) with Global Mediacom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Mediacom Tbk has no effect on the direction of First Media i.e., First Media and Global Mediacom go up and down completely randomly.
Pair Corralation between First Media and Global Mediacom
Assuming the 90 days trading horizon First Media Tbk is expected to generate 1.85 times more return on investment than Global Mediacom. However, First Media is 1.85 times more volatile than Global Mediacom Tbk. It trades about 0.31 of its potential returns per unit of risk. Global Mediacom Tbk is currently generating about -0.22 per unit of risk. If you would invest 8,000 in First Media Tbk on August 30, 2024 and sell it today you would earn a total of 1,800 from holding First Media Tbk or generate 22.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Media Tbk vs. Global Mediacom Tbk
Performance |
| Timeline |
| First Media Tbk |
| Global Mediacom Tbk |
First Media and Global Mediacom Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Media and Global Mediacom
The main advantage of trading using opposite First Media and Global Mediacom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Media position performs unexpectedly, Global Mediacom 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 Global Mediacom will offset losses from the drop in Global Mediacom's long position.| First Media vs. Bank Artos Indonesia | First Media vs. PT Bukalapak | First Media vs. Sumber Alfaria Trijaya | First Media vs. Merdeka Copper Gold |
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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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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