Correlation Between Mahaka Radio and Andalan Perkasa

Can any of the company-specific risk be diversified away by investing in both Mahaka Radio and Andalan Perkasa 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 Mahaka Radio and Andalan Perkasa into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Mahaka Radio Integra and Andalan Perkasa Abadi, you can compare the effects of market volatilities on Mahaka Radio and Andalan Perkasa 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 Mahaka Radio with a short position of Andalan Perkasa. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mahaka Radio and Andalan Perkasa.

Diversification Opportunities for Mahaka Radio and Andalan Perkasa

0.6

Correlation Coefficient

Mahaka Radio  Andalan Perkasa

Poor diversification

The 3 months correlation between Mahaka and Andalan is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Mahaka Radio Integra and Andalan Perkasa Abadi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Andalan Perkasa Abadi and Mahaka Radio 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 Mahaka Radio Integra are associated (or correlated) with Andalan Perkasa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Andalan Perkasa Abadi has no effect on the direction of Mahaka Radio i.e., Mahaka Radio and Andalan Perkasa go up and down completely randomly.

Pair Corralation between Mahaka Radio and Andalan Perkasa

Assuming the 90 days trading horizon Mahaka Radio Integra is expected to generate 0.25 times more return on investment than Andalan Perkasa. However, Mahaka Radio Integra is 3.93 times less risky than Andalan Perkasa. It trades about -0.09 of its potential returns per unit of risk. Andalan Perkasa Abadi is currently generating about -0.23 per unit of risk. If you would invest  5,300  in Mahaka Radio Integra on February 27, 2024 and sell it today you would lose (300.00) from holding Mahaka Radio Integra or give up 5.66% of portfolio value over 90 days.

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

Mahaka Radio Integra  vs.  Andalan Perkasa Abadi

Mahaka Radio Integra

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mahaka Radio Integra has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Andalan Perkasa Abadi

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Andalan Perkasa Abadi 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 June 2024. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Mahaka Radio and Andalan Perkasa

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

The idea behind Mahaka Radio Integra and Andalan Perkasa Abadi 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.