Correlation Between Mandala Multifinance and Trust Finance
Can any of the company-specific risk be diversified away by investing in both Mandala Multifinance and Trust Finance 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 Mandala Multifinance and Trust Finance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mandala Multifinance Tbk and Trust Finance Indonesia, you can compare the effects of market volatilities on Mandala Multifinance and Trust Finance 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 Mandala Multifinance with a short position of Trust Finance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mandala Multifinance and Trust Finance.
Diversification Opportunities for Mandala Multifinance and Trust Finance
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Mandala and Trust is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Mandala Multifinance Tbk and Trust Finance Indonesia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trust Finance Indonesia and Mandala Multifinance 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 Mandala Multifinance Tbk are associated (or correlated) with Trust Finance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trust Finance Indonesia has no effect on the direction of Mandala Multifinance i.e., Mandala Multifinance and Trust Finance go up and down completely randomly.
Pair Corralation between Mandala Multifinance and Trust Finance
Assuming the 90 days trading horizon Mandala Multifinance Tbk is expected to generate 12.38 times more return on investment than Trust Finance. However, Mandala Multifinance is 12.38 times more volatile than Trust Finance Indonesia. It trades about 0.05 of its potential returns per unit of risk. Trust Finance Indonesia is currently generating about 0.03 per unit of risk. If you would invest 84,362 in Mandala Multifinance Tbk on August 31, 2024 and sell it today you would earn a total of 250,638 from holding Mandala Multifinance Tbk or generate 297.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.79% |
| Values | Daily Returns |
Mandala Multifinance Tbk vs. Trust Finance Indonesia
Performance |
| Timeline |
| Mandala Multifinance Tbk |
| Trust Finance Indonesia |
Mandala Multifinance and Trust Finance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mandala Multifinance and Trust Finance
The main advantage of trading using opposite Mandala Multifinance and Trust Finance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mandala Multifinance position performs unexpectedly, Trust Finance 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 Trust Finance will offset losses from the drop in Trust Finance's long position.| Mandala Multifinance vs. Paninvest Tbk | Mandala Multifinance vs. Maskapai Reasuransi Indonesia | Mandala Multifinance vs. Panin Sekuritas Tbk | Mandala Multifinance vs. Wahana Ottomitra Multiartha |
| Trust Finance vs. Wahana Ottomitra Multiartha | Trust Finance vs. Yulie Sekurindo Tbk | Trust Finance vs. Trimegah Securities Tbk | Trust Finance vs. Mandala Multifinance Tbk |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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