Correlation Between Mitra Pinasthika and Steel Pipe
Can any of the company-specific risk be diversified away by investing in both Mitra Pinasthika and Steel Pipe 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 Steel Pipe 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 Steel Pipe Industry, you can compare the effects of market volatilities on Mitra Pinasthika and Steel Pipe 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 Steel Pipe. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mitra Pinasthika and Steel Pipe.
Diversification Opportunities for Mitra Pinasthika and Steel Pipe
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Mitra and Steel is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Mitra Pinasthika Mustika and Steel Pipe Industry in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Steel Pipe Industry 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 Steel Pipe. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Steel Pipe Industry has no effect on the direction of Mitra Pinasthika i.e., Mitra Pinasthika and Steel Pipe go up and down completely randomly.
Pair Corralation between Mitra Pinasthika and Steel Pipe
Assuming the 90 days trading horizon Mitra Pinasthika is expected to generate 2.35 times less return on investment than Steel Pipe. But when comparing it to its historical volatility, Mitra Pinasthika Mustika is 1.41 times less risky than Steel Pipe. It trades about 0.02 of its potential returns per unit of risk. Steel Pipe Industry is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 23,419 in Steel Pipe Industry on August 31, 2024 and sell it today you would earn a total of 4,981 from holding Steel Pipe Industry or generate 21.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mitra Pinasthika Mustika vs. Steel Pipe Industry
Performance |
| Timeline |
| Mitra Pinasthika Mustika |
| Steel Pipe Industry |
Mitra Pinasthika and Steel Pipe Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mitra Pinasthika and Steel Pipe
The main advantage of trading using opposite Mitra Pinasthika and Steel Pipe positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mitra Pinasthika position performs unexpectedly, Steel Pipe 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 Steel Pipe will offset losses from the drop in Steel Pipe'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 |
| Steel Pipe vs. Perusahaan Gas Negara | Steel Pipe vs. Vale Indonesia Tbk | Steel Pipe vs. Telkom Indonesia Tbk | Steel Pipe vs. Mitra Pinasthika Mustika |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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