Correlation Between Mustika Ratu and Langgeng Makmur
Can any of the company-specific risk be diversified away by investing in both Mustika Ratu and Langgeng Makmur 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 Mustika Ratu and Langgeng Makmur into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mustika Ratu Tbk and Langgeng Makmur Industri, you can compare the effects of market volatilities on Mustika Ratu and Langgeng Makmur 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 Mustika Ratu with a short position of Langgeng Makmur. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mustika Ratu and Langgeng Makmur.
Diversification Opportunities for Mustika Ratu and Langgeng Makmur
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Mustika and Langgeng is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Mustika Ratu Tbk and Langgeng Makmur Industri in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Langgeng Makmur Industri and Mustika Ratu 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 Mustika Ratu Tbk are associated (or correlated) with Langgeng Makmur. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Langgeng Makmur Industri has no effect on the direction of Mustika Ratu i.e., Mustika Ratu and Langgeng Makmur go up and down completely randomly.
Pair Corralation between Mustika Ratu and Langgeng Makmur
Assuming the 90 days trading horizon Mustika Ratu Tbk is expected to under-perform the Langgeng Makmur. But the stock apears to be less risky and, when comparing its historical volatility, Mustika Ratu Tbk is 1.59 times less risky than Langgeng Makmur. The stock trades about -0.09 of its potential returns per unit of risk. The Langgeng Makmur Industri is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 12,000 in Langgeng Makmur Industri on August 24, 2024 and sell it today you would earn a total of 1,500 from holding Langgeng Makmur Industri or generate 12.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.58% |
| Values | Daily Returns |
Mustika Ratu Tbk vs. Langgeng Makmur Industri
Performance |
| Timeline |
| Mustika Ratu Tbk |
| Langgeng Makmur Industri |
Mustika Ratu and Langgeng Makmur Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mustika Ratu and Langgeng Makmur
The main advantage of trading using opposite Mustika Ratu and Langgeng Makmur positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mustika Ratu position performs unexpectedly, Langgeng Makmur 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 Langgeng Makmur will offset losses from the drop in Langgeng Makmur's long position.| Mustika Ratu vs. Pyridam Farma Tbk | Mustika Ratu vs. Mandom Indonesia Tbk | Mustika Ratu vs. Langgeng Makmur Industri | Mustika Ratu vs. Merck Tbk |
| Langgeng Makmur vs. Kedaung Indah Can | Langgeng Makmur vs. Kedawung Setia Industrial | Langgeng Makmur vs. Mustika Ratu Tbk | Langgeng Makmur vs. Pyridam Farma 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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