Correlation Between Merck Tbk and Mitra Keluarga
Can any of the company-specific risk be diversified away by investing in both Merck Tbk and Mitra Keluarga 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 Merck Tbk and Mitra Keluarga into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Merck Tbk and Mitra Keluarga Karyasehat, you can compare the effects of market volatilities on Merck Tbk and Mitra Keluarga 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 Merck Tbk with a short position of Mitra Keluarga. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merck Tbk and Mitra Keluarga.
Diversification Opportunities for Merck Tbk and Mitra Keluarga
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Merck and Mitra is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Merck Tbk and Mitra Keluarga Karyasehat in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mitra Keluarga Karyasehat and Merck Tbk 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 Merck Tbk are associated (or correlated) with Mitra Keluarga. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mitra Keluarga Karyasehat has no effect on the direction of Merck Tbk i.e., Merck Tbk and Mitra Keluarga go up and down completely randomly.
Pair Corralation between Merck Tbk and Mitra Keluarga
Assuming the 90 days trading horizon Merck Tbk is expected to generate 0.47 times more return on investment than Mitra Keluarga. However, Merck Tbk is 2.11 times less risky than Mitra Keluarga. It trades about -0.36 of its potential returns per unit of risk. Mitra Keluarga Karyasehat is currently generating about -0.19 per unit of risk. If you would invest 370,000 in Merck Tbk on August 28, 2024 and sell it today you would lose (25,000) from holding Merck Tbk or give up 6.76% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Merck Tbk vs. Mitra Keluarga Karyasehat
Performance |
| Timeline |
| Merck Tbk |
| Mitra Keluarga Karyasehat |
Merck Tbk and Mitra Keluarga Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merck Tbk and Mitra Keluarga
The main advantage of trading using opposite Merck Tbk and Mitra Keluarga positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merck Tbk position performs unexpectedly, Mitra Keluarga 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 Mitra Keluarga will offset losses from the drop in Mitra Keluarga's long position.| Merck Tbk vs. Astra Graphia Tbk | Merck Tbk vs. Hexindo Adiperkasa Tbk | Merck Tbk vs. Lautan Luas Tbk | Merck Tbk vs. Citra Marga Nusaphala |
| Mitra Keluarga vs. Astra Graphia Tbk | Mitra Keluarga vs. Hexindo Adiperkasa Tbk | Mitra Keluarga vs. Lautan Luas Tbk | Mitra Keluarga vs. Citra Marga Nusaphala |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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