Correlation Between PT MNC and Menteng Heritage

Can any of the company-specific risk be diversified away by investing in both PT MNC and Menteng Heritage 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 MNC and Menteng Heritage into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between PT MNC Energy and Menteng Heritage Realty, you can compare the effects of market volatilities on PT MNC and Menteng Heritage 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 MNC with a short position of Menteng Heritage. Check out your portfolio center. Please also check ongoing floating volatility patterns of PT MNC and Menteng Heritage.

Diversification Opportunities for PT MNC and Menteng Heritage

0.18

Correlation Coefficient

PT MNC  Menteng Heritage

Average diversification

The 3 months correlation between IATA and Menteng is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding PT MNC Energy and Menteng Heritage Realty in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Menteng Heritage Realty and PT MNC 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 MNC Energy are associated (or correlated) with Menteng Heritage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Menteng Heritage Realty has no effect on the direction of PT MNC i.e., PT MNC and Menteng Heritage go up and down completely randomly.

Pair Corralation between PT MNC and Menteng Heritage

Assuming the 90 days trading horizon PT MNC Energy is expected to under-perform the Menteng Heritage. In addition to that, PT MNC is 1.13 times more volatile than Menteng Heritage Realty. It trades about -0.51 of its total potential returns per unit of risk. Menteng Heritage Realty is currently generating about 0.14 per unit of volatility. If you would invest  1,900  in Menteng Heritage Realty on March 18, 2024 and sell it today you would earn a total of  300.00  from holding Menteng Heritage Realty or generate 15.79% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

PT MNC Energy  vs.  Menteng Heritage Realty

PT MNC Energy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PT MNC Energy has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in July 2024. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Menteng Heritage Realty

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Menteng Heritage Realty has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in July 2024. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with PT MNC and Menteng Heritage

The main advantage of trading using opposite PT MNC and Menteng Heritage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PT MNC position performs unexpectedly, Menteng Heritage 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 Menteng Heritage will offset losses from the drop in Menteng Heritage's long position.

The idea behind PT MNC Energy and Menteng Heritage Realty pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.