Correlation Between Metrodata Electronics and First Media
Can any of the company-specific risk be diversified away by investing in both Metrodata Electronics and First Media 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 Metrodata Electronics and First Media into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Metrodata Electronics Tbk and First Media Tbk, you can compare the effects of market volatilities on Metrodata Electronics and First Media 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 Metrodata Electronics with a short position of First Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of Metrodata Electronics and First Media.
Diversification Opportunities for Metrodata Electronics and First Media
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Metrodata and First is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Metrodata Electronics Tbk and First Media Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Media Tbk and Metrodata Electronics 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 Metrodata Electronics Tbk are associated (or correlated) with First Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Media Tbk has no effect on the direction of Metrodata Electronics i.e., Metrodata Electronics and First Media go up and down completely randomly.
Pair Corralation between Metrodata Electronics and First Media
Assuming the 90 days trading horizon Metrodata Electronics Tbk is expected to under-perform the First Media. But the stock apears to be less risky and, when comparing its historical volatility, Metrodata Electronics Tbk is 1.13 times less risky than First Media. The stock trades about -0.26 of its potential returns per unit of risk. The First Media Tbk is currently generating about -0.23 of returns per unit of risk over similar time horizon. If you would invest 9,200 in First Media Tbk on October 23, 2024 and sell it today you would lose (900.00) from holding First Media Tbk or give up 9.78% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Metrodata Electronics Tbk vs. First Media Tbk
Performance |
| Timeline |
| Metrodata Electronics Tbk |
| First Media Tbk |
Metrodata Electronics and First Media Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Metrodata Electronics and First Media
The main advantage of trading using opposite Metrodata Electronics and First Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Metrodata Electronics position performs unexpectedly, First Media 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 First Media will offset losses from the drop in First Media's long position.| Metrodata Electronics vs. Multipolar Tbk | Metrodata Electronics vs. Matahari Putra Prima | Metrodata Electronics vs. Ramayana Lestari Sentosa |
| First Media vs. Garuda Metalindo Tbk | First Media vs. Alumindo Light Metal | First Media vs. Smartfren Telecom Tbk | First Media vs. Ace Hardware Indonesia |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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