Correlation Between Medco Energi and Timah Persero
Can any of the company-specific risk be diversified away by investing in both Medco Energi and Timah Persero 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 Timah Persero 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 Timah Persero Tbk, you can compare the effects of market volatilities on Medco Energi and Timah Persero 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 Timah Persero. Check out your portfolio center. Please also check ongoing floating volatility patterns of Medco Energi and Timah Persero.
Diversification Opportunities for Medco Energi and Timah Persero
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between Medco and Timah is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Medco Energi Internasional and Timah Persero Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Timah Persero 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 Timah Persero. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Timah Persero Tbk has no effect on the direction of Medco Energi i.e., Medco Energi and Timah Persero go up and down completely randomly.
Pair Corralation between Medco Energi and Timah Persero
Assuming the 90 days trading horizon Medco Energi is expected to generate 3.41 times less return on investment than Timah Persero. But when comparing it to its historical volatility, Medco Energi Internasional is 1.54 times less risky than Timah Persero. It trades about 0.04 of its potential returns per unit of risk. Timah Persero Tbk is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 65,500 in Timah Persero Tbk on September 2, 2024 and sell it today you would earn a total of 46,500 from holding Timah Persero Tbk or generate 70.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Medco Energi Internasional vs. Timah Persero Tbk
Performance |
| Timeline |
| Medco Energi Interna |
| Timah Persero Tbk |
Medco Energi and Timah Persero Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Medco Energi and Timah Persero
The main advantage of trading using opposite Medco Energi and Timah Persero positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Medco Energi position performs unexpectedly, Timah Persero 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 Timah Persero will offset losses from the drop in Timah Persero's long position.| Medco Energi vs. Mitrabahtera Segara Sejati | Medco Energi vs. Weha Transportasi Indonesia | Medco Energi vs. Rig Tenders Tbk |
| Timah Persero vs. Perusahaan Gas Negara | Timah Persero vs. Telkom Indonesia Tbk | Timah Persero vs. Mitra Pinasthika Mustika | Timah Persero vs. Jakarta Int Hotels |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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