Correlation Between PT Boston and Metro Healthcare
Can any of the company-specific risk be diversified away by investing in both PT Boston and Metro Healthcare 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 PT Boston and Metro Healthcare into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PT Boston Furniture and Metro Healthcare Indonesia, you can compare the effects of market volatilities on PT Boston and Metro Healthcare 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 PT Boston with a short position of Metro Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of PT Boston and Metro Healthcare.
Diversification Opportunities for PT Boston and Metro Healthcare
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between SOFA and Metro is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding PT Boston Furniture and Metro Healthcare Indonesia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metro Healthcare Ind and PT Boston 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 PT Boston Furniture are associated (or correlated) with Metro Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metro Healthcare Ind has no effect on the direction of PT Boston i.e., PT Boston and Metro Healthcare go up and down completely randomly.
Pair Corralation between PT Boston and Metro Healthcare
Assuming the 90 days trading horizon PT Boston Furniture is expected to generate 1.32 times more return on investment than Metro Healthcare. However, PT Boston is 1.32 times more volatile than Metro Healthcare Indonesia. It trades about 0.46 of its potential returns per unit of risk. Metro Healthcare Indonesia is currently generating about 0.39 per unit of risk. If you would invest 2,000 in PT Boston Furniture on August 30, 2024 and sell it today you would earn a total of 1,000.00 from holding PT Boston Furniture or generate 50.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
PT Boston Furniture vs. Metro Healthcare Indonesia
Performance |
| Timeline |
| PT Boston Furniture |
| Metro Healthcare Ind |
PT Boston and Metro Healthcare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PT Boston and Metro Healthcare
The main advantage of trading using opposite PT Boston and Metro Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PT Boston position performs unexpectedly, Metro Healthcare 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 Metro Healthcare will offset losses from the drop in Metro Healthcare's long position.| PT Boston vs. PT Hetzer Medical | PT Boston vs. Bangun Karya Perkasa | PT Boston vs. PT Sari Kreasi | PT Boston vs. PT Dewi Shri |
| Metro Healthcare vs. Medikaloka Hermina PT | Metro Healthcare vs. Sarana Meditama Metropolitan | Metro Healthcare vs. Mitra Keluarga Karyasehat | Metro Healthcare vs. Bhakti Multi Artha |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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