Correlation Between Media Nusantara and Smartfren Telecom
Can any of the company-specific risk be diversified away by investing in both Media Nusantara 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 Media Nusantara and Smartfren Telecom into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Media Nusantara Citra and Smartfren Telecom Tbk, you can compare the effects of market volatilities on Media Nusantara 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 Media Nusantara with a short position of Smartfren Telecom. Check out your portfolio center. Please also check ongoing floating volatility patterns of Media Nusantara and Smartfren Telecom.
Diversification Opportunities for Media Nusantara and Smartfren Telecom
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Media and Smartfren is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Media Nusantara Citra 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 Media Nusantara 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 Media Nusantara Citra 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 Media Nusantara i.e., Media Nusantara and Smartfren Telecom go up and down completely randomly.
Pair Corralation between Media Nusantara and Smartfren Telecom
Assuming the 90 days trading horizon Media Nusantara Citra is expected to under-perform the Smartfren Telecom. But the stock apears to be less risky and, when comparing its historical volatility, Media Nusantara Citra is 1.9 times less risky than Smartfren Telecom. The stock trades about -0.5 of its potential returns per unit of risk. The Smartfren Telecom Tbk is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 2,300 in Smartfren Telecom Tbk on November 18, 2024 and sell it today you would earn a total of 0.00 from holding Smartfren Telecom Tbk or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Media Nusantara Citra vs. Smartfren Telecom Tbk
Performance |
| Timeline |
| Media Nusantara Citra |
| Smartfren Telecom Tbk |
Media Nusantara and Smartfren Telecom Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Media Nusantara and Smartfren Telecom
The main advantage of trading using opposite Media Nusantara and Smartfren Telecom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Media Nusantara 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.| Media Nusantara vs. Lenox Pasifik Investama | Media Nusantara vs. Multipolar Tbk | Media Nusantara vs. Lautan Luas Tbk | Media Nusantara vs. Metrodata Electronics Tbk |
| Smartfren Telecom vs. Indosat Tbk | Smartfren Telecom vs. XL Axiata Tbk | Smartfren Telecom vs. Energi Mega Persada | Smartfren Telecom vs. Bakrie Brothers 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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