Correlation Between First Media and Metrodata Electronics
Can any of the company-specific risk be diversified away by investing in both First Media and Metrodata Electronics 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 Metrodata Electronics 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 Metrodata Electronics Tbk, you can compare the effects of market volatilities on First Media and Metrodata Electronics 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 Metrodata Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Media and Metrodata Electronics.
Diversification Opportunities for First Media and Metrodata Electronics
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between First and Metrodata is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding First Media Tbk and Metrodata Electronics Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metrodata Electronics 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 Metrodata Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metrodata Electronics Tbk has no effect on the direction of First Media i.e., First Media and Metrodata Electronics go up and down completely randomly.
Pair Corralation between First Media and Metrodata Electronics
Assuming the 90 days trading horizon First Media Tbk is expected to generate 1.76 times more return on investment than Metrodata Electronics. However, First Media is 1.76 times more volatile than Metrodata Electronics Tbk. It trades about 0.03 of its potential returns per unit of risk. Metrodata Electronics Tbk is currently generating about 0.02 per unit of risk. If you would invest 7,200 in First Media Tbk on November 28, 2024 and sell it today you would earn a total of 1,400 from holding First Media Tbk or generate 19.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Media Tbk vs. Metrodata Electronics Tbk
Performance |
| Timeline |
| First Media Tbk |
| Metrodata Electronics Tbk |
First Media and Metrodata Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Media and Metrodata Electronics
The main advantage of trading using opposite First Media and Metrodata Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Media position performs unexpectedly, Metrodata Electronics 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 Metrodata Electronics will offset losses from the drop in Metrodata Electronics' long position.| First Media vs. FKS Food Sejahtera | First Media vs. PT Homeco Victoria | First Media vs. Metro Healthcare Indonesia | First Media vs. Humpuss Intermoda Transportasi |
| Metrodata Electronics vs. Multipolar Tbk | Metrodata Electronics vs. Astra Graphia Tbk | Metrodata Electronics vs. Matahari Putra Prima | Metrodata Electronics vs. Ramayana Lestari Sentosa |
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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