Correlation Between Transcoal Pacific and Medikaloka Hermina
Can any of the company-specific risk be diversified away by investing in both Transcoal Pacific and Medikaloka Hermina 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 Transcoal Pacific and Medikaloka Hermina into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Transcoal Pacific Tbk and Medikaloka Hermina PT, you can compare the effects of market volatilities on Transcoal Pacific and Medikaloka Hermina 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 Transcoal Pacific with a short position of Medikaloka Hermina. Check out your portfolio center. Please also check ongoing floating volatility patterns of Transcoal Pacific and Medikaloka Hermina.
Diversification Opportunities for Transcoal Pacific and Medikaloka Hermina
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Transcoal and Medikaloka is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Transcoal Pacific Tbk and Medikaloka Hermina PT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Medikaloka Hermina and Transcoal Pacific 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 Transcoal Pacific Tbk are associated (or correlated) with Medikaloka Hermina. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Medikaloka Hermina has no effect on the direction of Transcoal Pacific i.e., Transcoal Pacific and Medikaloka Hermina go up and down completely randomly.
Pair Corralation between Transcoal Pacific and Medikaloka Hermina
Assuming the 90 days trading horizon Transcoal Pacific Tbk is expected to generate 0.52 times more return on investment than Medikaloka Hermina. However, Transcoal Pacific Tbk is 1.93 times less risky than Medikaloka Hermina. It trades about 0.08 of its potential returns per unit of risk. Medikaloka Hermina PT is currently generating about 0.03 per unit of risk. If you would invest 730,000 in Transcoal Pacific Tbk on September 1, 2024 and sell it today you would earn a total of 12,500 from holding Transcoal Pacific Tbk or generate 1.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Transcoal Pacific Tbk vs. Medikaloka Hermina PT
Performance |
| Timeline |
| Transcoal Pacific Tbk |
| Medikaloka Hermina |
Transcoal Pacific and Medikaloka Hermina Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Transcoal Pacific and Medikaloka Hermina
The main advantage of trading using opposite Transcoal Pacific and Medikaloka Hermina positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Transcoal Pacific position performs unexpectedly, Medikaloka Hermina 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 Medikaloka Hermina will offset losses from the drop in Medikaloka Hermina's long position.| Transcoal Pacific vs. Bank Tabungan Pensiunan | Transcoal Pacific vs. Chandra Asri Petrochemical | Transcoal Pacific vs. Mitra Keluarga Karyasehat | Transcoal Pacific vs. Merdeka Copper Gold |
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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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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