Correlation Between Royal Prima and Matahari Department
Can any of the company-specific risk be diversified away by investing in both Royal Prima and Matahari Department 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 Royal Prima and Matahari Department into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Royal Prima PT and Matahari Department Store, you can compare the effects of market volatilities on Royal Prima and Matahari Department 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 Royal Prima with a short position of Matahari Department. Check out your portfolio center. Please also check ongoing floating volatility patterns of Royal Prima and Matahari Department.
Diversification Opportunities for Royal Prima and Matahari Department
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Royal and Matahari is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Royal Prima PT and Matahari Department Store in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Matahari Department Store and Royal Prima 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 Royal Prima PT are associated (or correlated) with Matahari Department. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Matahari Department Store has no effect on the direction of Royal Prima i.e., Royal Prima and Matahari Department go up and down completely randomly.
Pair Corralation between Royal Prima and Matahari Department
Assuming the 90 days trading horizon Royal Prima PT is expected to under-perform the Matahari Department. In addition to that, Royal Prima is 1.44 times more volatile than Matahari Department Store. It trades about -0.19 of its total potential returns per unit of risk. Matahari Department Store is currently generating about -0.14 per unit of volatility. If you would invest 146,000 in Matahari Department Store on September 3, 2024 and sell it today you would lose (5,000) from holding Matahari Department Store or give up 3.42% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Royal Prima PT vs. Matahari Department Store
Performance |
| Timeline |
| Royal Prima PT |
| Matahari Department Store |
Royal Prima and Matahari Department Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Royal Prima and Matahari Department
The main advantage of trading using opposite Royal Prima and Matahari Department positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Royal Prima position performs unexpectedly, Matahari Department 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 Matahari Department will offset losses from the drop in Matahari Department's long position.| Royal Prima vs. Medikaloka Hermina PT | Royal Prima vs. Sejahteraraya Anugrahjaya Tbk | Royal Prima vs. Prodia Widyahusada Tbk | Royal Prima vs. Sarana Meditama Metropolitan |
| Matahari Department vs. Surya Citra Media | Matahari Department vs. Akr Corporindo Tbk | Matahari Department vs. Media Nusantara Citra | Matahari Department vs. Pembangunan Perumahan PT |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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