Correlation Between Matahari Department and Ateliers Mecaniques
Can any of the company-specific risk be diversified away by investing in both Matahari Department and Ateliers Mecaniques 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 Matahari Department and Ateliers Mecaniques into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Matahari Department Store and Ateliers Mecaniques DIndonesie, you can compare the effects of market volatilities on Matahari Department and Ateliers Mecaniques 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 Matahari Department with a short position of Ateliers Mecaniques. Check out your portfolio center. Please also check ongoing floating volatility patterns of Matahari Department and Ateliers Mecaniques.
Diversification Opportunities for Matahari Department and Ateliers Mecaniques
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Matahari and Ateliers is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Matahari Department Store and Ateliers Mecaniques DIndonesie in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ateliers Mecaniques and Matahari Department 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 Matahari Department Store are associated (or correlated) with Ateliers Mecaniques. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ateliers Mecaniques has no effect on the direction of Matahari Department i.e., Matahari Department and Ateliers Mecaniques go up and down completely randomly.
Pair Corralation between Matahari Department and Ateliers Mecaniques
Assuming the 90 days trading horizon Matahari Department Store is expected to under-perform the Ateliers Mecaniques. But the stock apears to be less risky and, when comparing its historical volatility, Matahari Department Store is 1.46 times less risky than Ateliers Mecaniques. The stock trades about -0.23 of its potential returns per unit of risk. The Ateliers Mecaniques DIndonesie is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 14,400 in Ateliers Mecaniques DIndonesie on September 2, 2024 and sell it today you would earn a total of 0.00 from holding Ateliers Mecaniques DIndonesie or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Matahari Department Store vs. Ateliers Mecaniques DIndonesie
Performance |
| Timeline |
| Matahari Department Store |
| Ateliers Mecaniques |
Matahari Department and Ateliers Mecaniques Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Matahari Department and Ateliers Mecaniques
The main advantage of trading using opposite Matahari Department and Ateliers Mecaniques positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Matahari Department position performs unexpectedly, Ateliers Mecaniques 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 Ateliers Mecaniques will offset losses from the drop in Ateliers Mecaniques' long position.| Matahari Department vs. Japfa Comfeed Indonesia | Matahari Department vs. Charoen Pokphand Indonesia | Matahari Department vs. Erajaya Swasembada Tbk | Matahari Department vs. Indofood Cbp Sukses |
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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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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