Correlation Between Madusari Murni and Kedaung Indah
Can any of the company-specific risk be diversified away by investing in both Madusari Murni and Kedaung Indah 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 Madusari Murni and Kedaung Indah into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Madusari Murni Indah and Kedaung Indah Can, you can compare the effects of market volatilities on Madusari Murni and Kedaung Indah 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 Madusari Murni with a short position of Kedaung Indah. Check out your portfolio center. Please also check ongoing floating volatility patterns of Madusari Murni and Kedaung Indah.
Diversification Opportunities for Madusari Murni and Kedaung Indah
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Madusari and Kedaung is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Madusari Murni Indah and Kedaung Indah Can in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kedaung Indah Can and Madusari Murni 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 Madusari Murni Indah are associated (or correlated) with Kedaung Indah. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kedaung Indah Can has no effect on the direction of Madusari Murni i.e., Madusari Murni and Kedaung Indah go up and down completely randomly.
Pair Corralation between Madusari Murni and Kedaung Indah
Assuming the 90 days trading horizon Madusari Murni Indah is expected to generate 0.8 times more return on investment than Kedaung Indah. However, Madusari Murni Indah is 1.26 times less risky than Kedaung Indah. It trades about -0.18 of its potential returns per unit of risk. Kedaung Indah Can is currently generating about -0.43 per unit of risk. If you would invest 24,400 in Madusari Murni Indah on August 24, 2024 and sell it today you would lose (2,000) from holding Madusari Murni Indah or give up 8.2% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Madusari Murni Indah vs. Kedaung Indah Can
Performance |
| Timeline |
| Madusari Murni Indah |
| Kedaung Indah Can |
Madusari Murni and Kedaung Indah Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Madusari Murni and Kedaung Indah
The main advantage of trading using opposite Madusari Murni and Kedaung Indah positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Madusari Murni position performs unexpectedly, Kedaung Indah 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 Kedaung Indah will offset losses from the drop in Kedaung Indah's long position.| Madusari Murni vs. Kedaung Indah Can | Madusari Murni vs. Langgeng Makmur Industri | Madusari Murni vs. Kabelindo Murni Tbk | Madusari Murni vs. Mustika Ratu Tbk |
| Kedaung Indah vs. Langgeng Makmur Industri | Kedaung Indah vs. Kedawung Setia Industrial | Kedaung Indah vs. Mustika Ratu Tbk | Kedaung Indah vs. Kabelindo Murni 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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