Correlation Between Kedawung Setia and Megapolitan Developments
Can any of the company-specific risk be diversified away by investing in both Kedawung Setia and Megapolitan Developments 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 Kedawung Setia and Megapolitan Developments into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kedawung Setia Industrial and Megapolitan Developments Tbk, you can compare the effects of market volatilities on Kedawung Setia and Megapolitan Developments 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 Kedawung Setia with a short position of Megapolitan Developments. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kedawung Setia and Megapolitan Developments.
Diversification Opportunities for Kedawung Setia and Megapolitan Developments
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Kedawung and Megapolitan is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Kedawung Setia Industrial and Megapolitan Developments Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Megapolitan Developments and Kedawung Setia 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 Kedawung Setia Industrial are associated (or correlated) with Megapolitan Developments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Megapolitan Developments has no effect on the direction of Kedawung Setia i.e., Kedawung Setia and Megapolitan Developments go up and down completely randomly.
Pair Corralation between Kedawung Setia and Megapolitan Developments
Assuming the 90 days trading horizon Kedawung Setia Industrial is expected to generate 0.38 times more return on investment than Megapolitan Developments. However, Kedawung Setia Industrial is 2.65 times less risky than Megapolitan Developments. It trades about -0.04 of its potential returns per unit of risk. Megapolitan Developments Tbk is currently generating about -0.02 per unit of risk. If you would invest 46,125 in Kedawung Setia Industrial on August 31, 2024 and sell it today you would lose (2,325) from holding Kedawung Setia Industrial or give up 5.04% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kedawung Setia Industrial vs. Megapolitan Developments Tbk
Performance |
| Timeline |
| Kedawung Setia Industrial |
| Megapolitan Developments |
Kedawung Setia and Megapolitan Developments Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kedawung Setia and Megapolitan Developments
The main advantage of trading using opposite Kedawung Setia and Megapolitan Developments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kedawung Setia position performs unexpectedly, Megapolitan Developments 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 Megapolitan Developments will offset losses from the drop in Megapolitan Developments' long position.| Kedawung Setia vs. Kedaung Indah Can | Kedawung Setia vs. Langgeng Makmur Industri | Kedawung Setia vs. Kabelindo Murni Tbk | Kedawung Setia vs. Mustika Ratu 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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