Correlation Between Matahari Department and Link Net
Can any of the company-specific risk be diversified away by investing in both Matahari Department and Link Net 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 Link Net 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 Link Net Tbk, you can compare the effects of market volatilities on Matahari Department and Link Net 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 Link Net. Check out your portfolio center. Please also check ongoing floating volatility patterns of Matahari Department and Link Net.
Diversification Opportunities for Matahari Department and Link Net
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Matahari and Link is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Matahari Department Store and Link Net Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Link Net Tbk 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 Link Net. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Link Net Tbk has no effect on the direction of Matahari Department i.e., Matahari Department and Link Net go up and down completely randomly.
Pair Corralation between Matahari Department and Link Net
Assuming the 90 days trading horizon Matahari Department Store is expected to under-perform the Link Net. But the stock apears to be less risky and, when comparing its historical volatility, Matahari Department Store is 1.24 times less risky than Link Net. The stock trades about -0.07 of its potential returns per unit of risk. The Link Net Tbk is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest 276,510 in Link Net Tbk on August 30, 2024 and sell it today you would lose (156,510) from holding Link Net Tbk or give up 56.6% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.79% |
| Values | Daily Returns |
Matahari Department Store vs. Link Net Tbk
Performance |
| Timeline |
| Matahari Department Store |
| Link Net Tbk |
Matahari Department and Link Net Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Matahari Department and Link Net
The main advantage of trading using opposite Matahari Department and Link Net positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Matahari Department position performs unexpectedly, Link Net 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 Link Net will offset losses from the drop in Link Net's long position.| Matahari Department vs. Surya Citra Media | Matahari Department vs. Akr Corporindo Tbk | Matahari Department vs. Media Nusantara Citra | Matahari Department vs. Pembangunan Perumahan PT |
| Link Net vs. Mitra Keluarga Karyasehat | Link Net vs. Surya Citra Media | Link Net vs. Matahari Department Store | Link Net vs. Puradelta Lestari PT |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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