Correlation Between Megapower Makmur and Terregra Asia
Can any of the company-specific risk be diversified away by investing in both Megapower Makmur and Terregra Asia 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 Megapower Makmur and Terregra Asia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Megapower Makmur TBK and Terregra Asia Energy, you can compare the effects of market volatilities on Megapower Makmur and Terregra Asia 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 Megapower Makmur with a short position of Terregra Asia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Megapower Makmur and Terregra Asia.
Diversification Opportunities for Megapower Makmur and Terregra Asia
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Megapower and Terregra is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Megapower Makmur TBK and Terregra Asia Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Terregra Asia Energy and Megapower Makmur 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 Megapower Makmur TBK are associated (or correlated) with Terregra Asia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Terregra Asia Energy has no effect on the direction of Megapower Makmur i.e., Megapower Makmur and Terregra Asia go up and down completely randomly.
Pair Corralation between Megapower Makmur and Terregra Asia
Assuming the 90 days trading horizon Megapower Makmur TBK is expected to generate 1.09 times more return on investment than Terregra Asia. However, Megapower Makmur is 1.09 times more volatile than Terregra Asia Energy. It trades about 0.04 of its potential returns per unit of risk. Terregra Asia Energy is currently generating about -0.05 per unit of risk. If you would invest 6,700 in Megapower Makmur TBK on September 12, 2024 and sell it today you would earn a total of 1,700 from holding Megapower Makmur TBK or generate 25.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.69% |
| Values | Daily Returns |
Megapower Makmur TBK vs. Terregra Asia Energy
Performance |
| Timeline |
| Megapower Makmur TBK |
| Terregra Asia Energy |
Megapower Makmur and Terregra Asia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Megapower Makmur and Terregra Asia
The main advantage of trading using opposite Megapower Makmur and Terregra Asia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Megapower Makmur position performs unexpectedly, Terregra Asia 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 Terregra Asia will offset losses from the drop in Terregra Asia's long position.| Megapower Makmur vs. Terregra Asia Energy | Megapower Makmur vs. Bali Towerindo Sentra | Megapower Makmur vs. Sanurhasta Mitra PT | Megapower Makmur vs. Kencana Energi Lestari |
| Terregra Asia vs. Kapuas Prima Coal | Terregra Asia vs. Cikarang Listrindo Tbk | Terregra Asia vs. PP Presisi Tbk | Terregra Asia vs. Alfa Energi Investama |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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