Correlation Between Mitrabara Adiperdana and Adaro Minerals
Can any of the company-specific risk be diversified away by investing in both Mitrabara Adiperdana and Adaro Minerals 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 Mitrabara Adiperdana and Adaro Minerals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mitrabara Adiperdana PT and Adaro Minerals Indonesia, you can compare the effects of market volatilities on Mitrabara Adiperdana and Adaro Minerals 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 Mitrabara Adiperdana with a short position of Adaro Minerals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mitrabara Adiperdana and Adaro Minerals.
Diversification Opportunities for Mitrabara Adiperdana and Adaro Minerals
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Mitrabara and Adaro is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Mitrabara Adiperdana PT and Adaro Minerals Indonesia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Adaro Minerals Indonesia and Mitrabara Adiperdana 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 Mitrabara Adiperdana PT are associated (or correlated) with Adaro Minerals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Adaro Minerals Indonesia has no effect on the direction of Mitrabara Adiperdana i.e., Mitrabara Adiperdana and Adaro Minerals go up and down completely randomly.
Pair Corralation between Mitrabara Adiperdana and Adaro Minerals
Assuming the 90 days trading horizon Mitrabara Adiperdana PT is expected to under-perform the Adaro Minerals. But the stock apears to be less risky and, when comparing its historical volatility, Mitrabara Adiperdana PT is 1.99 times less risky than Adaro Minerals. The stock trades about -0.42 of its potential returns per unit of risk. The Adaro Minerals Indonesia is currently generating about -0.14 of returns per unit of risk over similar time horizon. If you would invest 140,000 in Adaro Minerals Indonesia on August 26, 2024 and sell it today you would lose (10,500) from holding Adaro Minerals Indonesia or give up 7.5% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mitrabara Adiperdana PT vs. Adaro Minerals Indonesia
Performance |
| Timeline |
| Mitrabara Adiperdana |
| Adaro Minerals Indonesia |
Mitrabara Adiperdana and Adaro Minerals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mitrabara Adiperdana and Adaro Minerals
The main advantage of trading using opposite Mitrabara Adiperdana and Adaro Minerals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mitrabara Adiperdana position performs unexpectedly, Adaro Minerals 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 Adaro Minerals will offset losses from the drop in Adaro Minerals' long position.| Mitrabara Adiperdana vs. Baramulti Suksessarana Tbk | Mitrabara Adiperdana vs. Samindo Resources Tbk | Mitrabara Adiperdana vs. Hexindo Adiperkasa Tbk | Mitrabara Adiperdana vs. Petrosea Tbk |
| Adaro Minerals vs. Bank Artos Indonesia | Adaro Minerals vs. GoTo Gojek Tokopedia | Adaro Minerals vs. Elang Mahkota Teknologi | Adaro Minerals vs. PT Bukalapak |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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