Correlation Between Mitra Pinasthika and Bank Rakyat
Can any of the company-specific risk be diversified away by investing in both Mitra Pinasthika and Bank Rakyat 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 Mitra Pinasthika and Bank Rakyat into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mitra Pinasthika Mustika and Bank Rakyat Indonesia, you can compare the effects of market volatilities on Mitra Pinasthika and Bank Rakyat 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 Mitra Pinasthika with a short position of Bank Rakyat. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mitra Pinasthika and Bank Rakyat.
Diversification Opportunities for Mitra Pinasthika and Bank Rakyat
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Mitra and Bank is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Mitra Pinasthika Mustika and Bank Rakyat Indonesia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank Rakyat Indonesia and Mitra Pinasthika 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 Mitra Pinasthika Mustika are associated (or correlated) with Bank Rakyat. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank Rakyat Indonesia has no effect on the direction of Mitra Pinasthika i.e., Mitra Pinasthika and Bank Rakyat go up and down completely randomly.
Pair Corralation between Mitra Pinasthika and Bank Rakyat
Assuming the 90 days trading horizon Mitra Pinasthika Mustika is expected to generate 0.44 times more return on investment than Bank Rakyat. However, Mitra Pinasthika Mustika is 2.27 times less risky than Bank Rakyat. It trades about 0.02 of its potential returns per unit of risk. Bank Rakyat Indonesia is currently generating about -0.04 per unit of risk. If you would invest 89,607 in Mitra Pinasthika Mustika on September 3, 2024 and sell it today you would earn a total of 9,393 from holding Mitra Pinasthika Mustika or generate 10.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mitra Pinasthika Mustika vs. Bank Rakyat Indonesia
Performance |
| Timeline |
| Mitra Pinasthika Mustika |
| Bank Rakyat Indonesia |
Mitra Pinasthika and Bank Rakyat Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mitra Pinasthika and Bank Rakyat
The main advantage of trading using opposite Mitra Pinasthika and Bank Rakyat positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mitra Pinasthika position performs unexpectedly, Bank Rakyat 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 Bank Rakyat will offset losses from the drop in Bank Rakyat's long position.| Mitra Pinasthika vs. Saratoga Investama Sedaya | Mitra Pinasthika vs. Puradelta Lestari PT | Mitra Pinasthika vs. Cikarang Listrindo Tbk | Mitra Pinasthika vs. Erajaya Swasembada Tbk |
| Bank Rakyat vs. Paninvest Tbk | Bank Rakyat vs. Mitra Pinasthika Mustika | Bank Rakyat vs. Jakarta Int Hotels | Bank Rakyat vs. Asuransi Harta Aman |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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