Correlation Between Malindo Feedmill and Arwana Citramulia
Can any of the company-specific risk be diversified away by investing in both Malindo Feedmill and Arwana Citramulia 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 Malindo Feedmill and Arwana Citramulia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Malindo Feedmill Tbk and Arwana Citramulia Tbk, you can compare the effects of market volatilities on Malindo Feedmill and Arwana Citramulia 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 Malindo Feedmill with a short position of Arwana Citramulia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Malindo Feedmill and Arwana Citramulia.
Diversification Opportunities for Malindo Feedmill and Arwana Citramulia
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Malindo and Arwana is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Malindo Feedmill Tbk and Arwana Citramulia Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arwana Citramulia Tbk and Malindo Feedmill 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 Malindo Feedmill Tbk are associated (or correlated) with Arwana Citramulia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arwana Citramulia Tbk has no effect on the direction of Malindo Feedmill i.e., Malindo Feedmill and Arwana Citramulia go up and down completely randomly.
Pair Corralation between Malindo Feedmill and Arwana Citramulia
Assuming the 90 days trading horizon Malindo Feedmill Tbk is expected to generate 2.75 times more return on investment than Arwana Citramulia. However, Malindo Feedmill is 2.75 times more volatile than Arwana Citramulia Tbk. It trades about -0.01 of its potential returns per unit of risk. Arwana Citramulia Tbk is currently generating about -0.24 per unit of risk. If you would invest 76,500 in Malindo Feedmill Tbk on September 2, 2024 and sell it today you would lose (500.00) from holding Malindo Feedmill Tbk or give up 0.65% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Malindo Feedmill Tbk vs. Arwana Citramulia Tbk
Performance |
| Timeline |
| Malindo Feedmill Tbk |
| Arwana Citramulia Tbk |
Malindo Feedmill and Arwana Citramulia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Malindo Feedmill and Arwana Citramulia
The main advantage of trading using opposite Malindo Feedmill and Arwana Citramulia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Malindo Feedmill position performs unexpectedly, Arwana Citramulia 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 Arwana Citramulia will offset losses from the drop in Arwana Citramulia's long position.| Malindo Feedmill vs. Bank BRISyariah Tbk | Malindo Feedmill vs. Mitra Pinasthika Mustika | Malindo Feedmill vs. Jakarta Int Hotels | Malindo Feedmill vs. Indosterling Technomedia Tbk |
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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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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