Correlation Between PT Global and MGIC INVESTMENT

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

By analyzing existing cross correlation between PT Global Mediacom and MGIC INVESTMENT, you can compare the effects of market volatilities on PT Global and MGIC INVESTMENT 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 Global with a short position of MGIC INVESTMENT. Check out your portfolio center. Please also check ongoing floating volatility patterns of PT Global and MGIC INVESTMENT.

Diversification Opportunities for PT Global and MGIC INVESTMENT

-0.3

Correlation Coefficient

PT Global  MGIC INVESTMENT

Very good diversification

The 3 months correlation between 06L and MGIC is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding PT Global Mediacom and MGIC INVESTMENT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MGIC INVESTMENT and PT Global 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 Global Mediacom are associated (or correlated) with MGIC INVESTMENT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MGIC INVESTMENT has no effect on the direction of PT Global i.e., PT Global and MGIC INVESTMENT go up and down completely randomly.

Pair Corralation between PT Global and MGIC INVESTMENT

Assuming the 90 days trading horizon PT Global Mediacom is expected to under-perform the MGIC INVESTMENT. In addition to that, PT Global is 1.76 times more volatile than MGIC INVESTMENT. It trades about -0.03 of its total potential returns per unit of risk. MGIC INVESTMENT is currently generating about 0.11 per unit of volatility. If you would invest  2,267  in MGIC INVESTMENT on September 1, 2024 and sell it today you would earn a total of  213.00  from holding MGIC INVESTMENT or generate 9.4% return on investment over 90 days.

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

PT Global Mediacom  vs.  MGIC INVESTMENT

PT Global Mediacom

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PT Global Mediacom has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, PT Global is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

MGIC INVESTMENT

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in MGIC INVESTMENT are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile fundamental indicators, MGIC INVESTMENT may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with PT Global and MGIC INVESTMENT

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

The idea behind PT Global Mediacom and MGIC INVESTMENT 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.

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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.