Correlation Between Makmur Berkah and Andalan Sakti

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

By analyzing existing cross correlation between Makmur Berkah Amanda and Andalan Sakti Primaindo, you can compare the effects of market volatilities on Makmur Berkah and Andalan Sakti 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 Makmur Berkah with a short position of Andalan Sakti. Check out your portfolio center. Please also check ongoing floating volatility patterns of Makmur Berkah and Andalan Sakti.

Diversification Opportunities for Makmur Berkah and Andalan Sakti

0.46

Correlation Coefficient

Makmur Berkah  Andalan Sakti

Very weak diversification

The 3 months correlation between Makmur and Andalan is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Makmur Berkah Amanda and Andalan Sakti Primaindo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Andalan Sakti Primaindo and Makmur Berkah 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 Makmur Berkah Amanda are associated (or correlated) with Andalan Sakti. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Andalan Sakti Primaindo has no effect on the direction of Makmur Berkah i.e., Makmur Berkah and Andalan Sakti go up and down completely randomly.

Pair Corralation between Makmur Berkah and Andalan Sakti

Assuming the 90 days trading horizon Makmur Berkah Amanda is expected to generate 0.38 times more return on investment than Andalan Sakti. However, Makmur Berkah Amanda is 2.66 times less risky than Andalan Sakti. It trades about -0.11 of its potential returns per unit of risk. Andalan Sakti Primaindo is currently generating about -0.27 per unit of risk. If you would invest  11,200  in Makmur Berkah Amanda on September 5, 2024 and sell it today you would lose (300.00) from holding Makmur Berkah Amanda or give up 2.68% of portfolio value over 90 days.

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

Makmur Berkah Amanda  vs.  Andalan Sakti Primaindo

Makmur Berkah Amanda

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Makmur Berkah Amanda has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Makmur Berkah is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Andalan Sakti Primaindo

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Andalan Sakti Primaindo 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 forward-looking signals remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Makmur Berkah and Andalan Sakti

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

The idea behind Makmur Berkah Amanda and Andalan Sakti Primaindo 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..