Correlation Between Maming Enam and Arthavest Tbk

Can any of the company-specific risk be diversified away by investing in both Maming Enam and Arthavest Tbk 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 Maming Enam and Arthavest Tbk into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Maming Enam Sembilan and Arthavest Tbk, you can compare the effects of market volatilities on Maming Enam and Arthavest Tbk 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 Maming Enam with a short position of Arthavest Tbk. Check out your portfolio center. Please also check ongoing floating volatility patterns of Maming Enam and Arthavest Tbk.

Diversification Opportunities for Maming Enam and Arthavest Tbk

0.31

Correlation Coefficient

Maming Enam  Arthavest Tbk

Weak diversification

The 3 months correlation between Maming and Arthavest is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Maming Enam Sembilan and Arthavest Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arthavest Tbk and Maming Enam 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 Maming Enam Sembilan are associated (or correlated) with Arthavest Tbk. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arthavest Tbk has no effect on the direction of Maming Enam i.e., Maming Enam and Arthavest Tbk go up and down completely randomly.

Pair Corralation between Maming Enam and Arthavest Tbk

Assuming the 90 days trading horizon Maming Enam Sembilan is expected to generate 7.94 times more return on investment than Arthavest Tbk. However, Maming Enam is 7.94 times more volatile than Arthavest Tbk. It trades about 0.05 of its potential returns per unit of risk. Arthavest Tbk is currently generating about -0.13 per unit of risk. If you would invest  30,200  in Maming Enam Sembilan on September 14, 2024 and sell it today you would earn a total of  2,000  from holding Maming Enam Sembilan or generate 6.62% return on investment over 90 days.

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

Maming Enam Sembilan  vs.  Arthavest Tbk

Maming Enam Sembilan

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Maming Enam Sembilan are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Maming Enam disclosed solid returns over the last few months and may actually be approaching a breakup point.

Arthavest Tbk

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Maming Enam and Arthavest Tbk

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

The idea behind Maming Enam Sembilan and Arthavest Tbk 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.