Correlation Between Merdeka Copper and Smartfren Telecom
Can any of the company-specific risk be diversified away by investing in both Merdeka Copper and Smartfren Telecom 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 Merdeka Copper and Smartfren Telecom into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Merdeka Copper Gold and Smartfren Telecom Tbk, you can compare the effects of market volatilities on Merdeka Copper and Smartfren Telecom 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 Merdeka Copper with a short position of Smartfren Telecom. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merdeka Copper and Smartfren Telecom.
Diversification Opportunities for Merdeka Copper and Smartfren Telecom
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Merdeka and Smartfren is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Merdeka Copper Gold and Smartfren Telecom Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Smartfren Telecom Tbk and Merdeka Copper 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 Merdeka Copper Gold are associated (or correlated) with Smartfren Telecom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Smartfren Telecom Tbk has no effect on the direction of Merdeka Copper i.e., Merdeka Copper and Smartfren Telecom go up and down completely randomly.
Pair Corralation between Merdeka Copper and Smartfren Telecom
Assuming the 90 days trading horizon Merdeka Copper Gold is expected to under-perform the Smartfren Telecom. But the stock apears to be less risky and, when comparing its historical volatility, Merdeka Copper Gold is 1.16 times less risky than Smartfren Telecom. The stock trades about -0.41 of its potential returns per unit of risk. The Smartfren Telecom Tbk is currently generating about -0.12 of returns per unit of risk over similar time horizon. If you would invest 2,700 in Smartfren Telecom Tbk on August 30, 2024 and sell it today you would lose (200.00) from holding Smartfren Telecom Tbk or give up 7.41% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Merdeka Copper Gold vs. Smartfren Telecom Tbk
Performance |
| Timeline |
| Merdeka Copper Gold |
| Smartfren Telecom Tbk |
Merdeka Copper and Smartfren Telecom Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merdeka Copper and Smartfren Telecom
The main advantage of trading using opposite Merdeka Copper and Smartfren Telecom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merdeka Copper position performs unexpectedly, Smartfren Telecom 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 Smartfren Telecom will offset losses from the drop in Smartfren Telecom's long position.| Merdeka Copper vs. PT Sarana Menara | Merdeka Copper vs. Tower Bersama Infrastructure | Merdeka Copper vs. Pabrik Kertas Tjiwi | Merdeka Copper vs. Mitra Keluarga Karyasehat |
| Smartfren Telecom vs. Bank Artos Indonesia | Smartfren Telecom vs. PT Bukalapak | Smartfren Telecom vs. Sumber Alfaria Trijaya | Smartfren Telecom vs. Merdeka Copper Gold |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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