Correlation Between Kencana Energi and Megapower Makmur
Can any of the company-specific risk be diversified away by investing in both Kencana Energi and Megapower Makmur 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 Kencana Energi and Megapower Makmur into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kencana Energi Lestari and Megapower Makmur TBK, you can compare the effects of market volatilities on Kencana Energi and Megapower Makmur 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 Kencana Energi with a short position of Megapower Makmur. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kencana Energi and Megapower Makmur.
Diversification Opportunities for Kencana Energi and Megapower Makmur
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Kencana and Megapower is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Kencana Energi Lestari and Megapower Makmur TBK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Megapower Makmur TBK and Kencana Energi 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 Kencana Energi Lestari are associated (or correlated) with Megapower Makmur. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Megapower Makmur TBK has no effect on the direction of Kencana Energi i.e., Kencana Energi and Megapower Makmur go up and down completely randomly.
Pair Corralation between Kencana Energi and Megapower Makmur
Assuming the 90 days trading horizon Kencana Energi Lestari is expected to under-perform the Megapower Makmur. But the stock apears to be less risky and, when comparing its historical volatility, Kencana Energi Lestari is 4.34 times less risky than Megapower Makmur. The stock trades about -0.02 of its potential returns per unit of risk. The Megapower Makmur TBK is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 5,000 in Megapower Makmur TBK on November 3, 2024 and sell it today you would earn a total of 4,900 from holding Megapower Makmur TBK or generate 98.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kencana Energi Lestari vs. Megapower Makmur TBK
Performance |
| Timeline |
| Kencana Energi Lestari |
| Megapower Makmur TBK |
Kencana Energi and Megapower Makmur Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kencana Energi and Megapower Makmur
The main advantage of trading using opposite Kencana Energi and Megapower Makmur positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kencana Energi position performs unexpectedly, Megapower Makmur 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 Megapower Makmur will offset losses from the drop in Megapower Makmur's long position.| Kencana Energi vs. PT Indonesia Kendaraan | Kencana Energi vs. Cikarang Listrindo Tbk | Kencana Energi vs. Jasa Armada Indonesia | Kencana Energi vs. Pelita Samudera Shipping |
| Megapower Makmur vs. Terregra Asia Energy | Megapower Makmur vs. Bali Towerindo Sentra | Megapower Makmur vs. Sanurhasta Mitra PT | Megapower Makmur vs. Kencana Energi Lestari |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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