Correlation Between Arwana Citramulia and Megapolitan Developments
Can any of the company-specific risk be diversified away by investing in both Arwana Citramulia and Megapolitan Developments 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 Arwana Citramulia and Megapolitan Developments into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Arwana Citramulia Tbk and Megapolitan Developments Tbk, you can compare the effects of market volatilities on Arwana Citramulia and Megapolitan Developments 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 Arwana Citramulia with a short position of Megapolitan Developments. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arwana Citramulia and Megapolitan Developments.
Diversification Opportunities for Arwana Citramulia and Megapolitan Developments
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Arwana and Megapolitan is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Arwana Citramulia Tbk and Megapolitan Developments Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Megapolitan Developments and Arwana Citramulia 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 Arwana Citramulia Tbk are associated (or correlated) with Megapolitan Developments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Megapolitan Developments has no effect on the direction of Arwana Citramulia i.e., Arwana Citramulia and Megapolitan Developments go up and down completely randomly.
Pair Corralation between Arwana Citramulia and Megapolitan Developments
Assuming the 90 days trading horizon Arwana Citramulia Tbk is expected to generate 0.54 times more return on investment than Megapolitan Developments. However, Arwana Citramulia Tbk is 1.84 times less risky than Megapolitan Developments. It trades about -0.05 of its potential returns per unit of risk. Megapolitan Developments Tbk is currently generating about -0.33 per unit of risk. If you would invest 66,730 in Arwana Citramulia Tbk on March 4, 2024 and sell it today you would lose (2,730) from holding Arwana Citramulia Tbk or give up 4.09% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Arwana Citramulia Tbk vs. Megapolitan Developments Tbk
Performance |
Timeline |
Arwana Citramulia Tbk |
Megapolitan Developments |
Arwana Citramulia and Megapolitan Developments Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Arwana Citramulia and Megapolitan Developments
The main advantage of trading using opposite Arwana Citramulia and Megapolitan Developments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Arwana Citramulia position performs unexpectedly, Megapolitan Developments 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 Megapolitan Developments will offset losses from the drop in Megapolitan Developments' long position.Arwana Citramulia vs. Indal Aluminium Industry | Arwana Citramulia vs. Intanwijaya Internasional Tbk | Arwana Citramulia vs. Champion Pacific Indonesia | Arwana Citramulia vs. Mitra Pinasthika Mustika |
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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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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