Correlation Between Medco Energi and Indosat Tbk
Can any of the company-specific risk be diversified away by investing in both Medco Energi and Indosat Tbk 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 Medco Energi and Indosat Tbk into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Medco Energi Internasional and Indosat Tbk, you can compare the effects of market volatilities on Medco Energi and Indosat Tbk 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 Medco Energi with a short position of Indosat Tbk. Check out your portfolio center. Please also check ongoing floating volatility patterns of Medco Energi and Indosat Tbk.
Diversification Opportunities for Medco Energi and Indosat Tbk
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between Medco and Indosat is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Medco Energi Internasional and Indosat Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Indosat Tbk and Medco Energi 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 Medco Energi Internasional are associated (or correlated) with Indosat Tbk. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Indosat Tbk has no effect on the direction of Medco Energi i.e., Medco Energi and Indosat Tbk go up and down completely randomly.
Pair Corralation between Medco Energi and Indosat Tbk
Assuming the 90 days trading horizon Medco Energi Internasional is expected to generate 0.3 times more return on investment than Indosat Tbk. However, Medco Energi Internasional is 3.32 times less risky than Indosat Tbk. It trades about -0.06 of its potential returns per unit of risk. Indosat Tbk is currently generating about -0.08 per unit of risk. If you would invest 132,422 in Medco Energi Internasional on September 1, 2024 and sell it today you would lose (23,422) from holding Medco Energi Internasional or give up 17.69% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.21% |
| Values | Daily Returns |
Medco Energi Internasional vs. Indosat Tbk
Performance |
| Timeline |
| Medco Energi Interna |
| Indosat Tbk |
Medco Energi and Indosat Tbk Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Medco Energi and Indosat Tbk
The main advantage of trading using opposite Medco Energi and Indosat Tbk positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Medco Energi position performs unexpectedly, Indosat Tbk 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 Indosat Tbk will offset losses from the drop in Indosat Tbk's long position.| Medco Energi vs. Vale Indonesia Tbk | Medco Energi vs. Timah Persero Tbk | Medco Energi vs. Perusahaan Gas Negara | Medco Energi vs. Bukit Asam Tbk |
| Indosat Tbk vs. Astra Agro Lestari | Indosat Tbk vs. Vale Indonesia Tbk | Indosat Tbk vs. Timah Persero Tbk | Indosat Tbk vs. Medco Energi Internasional |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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