Correlation Between Bank Mestika and Maskapai Reasuransi

Can any of the company-specific risk be diversified away by investing in both Bank Mestika and Maskapai Reasuransi 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 Bank Mestika and Maskapai Reasuransi into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Bank Mestika Dharma and Maskapai Reasuransi Indonesia, you can compare the effects of market volatilities on Bank Mestika and Maskapai Reasuransi 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 Bank Mestika with a short position of Maskapai Reasuransi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank Mestika and Maskapai Reasuransi.

Diversification Opportunities for Bank Mestika and Maskapai Reasuransi

0.32

Correlation Coefficient

Bank Mestika  Maskapai Reasuransi

Weak diversification

The 3 months correlation between Bank and Maskapai is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Bank Mestika Dharma and Maskapai Reasuransi Indonesia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Maskapai Reasuransi and Bank Mestika 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 Bank Mestika Dharma are associated (or correlated) with Maskapai Reasuransi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Maskapai Reasuransi has no effect on the direction of Bank Mestika i.e., Bank Mestika and Maskapai Reasuransi go up and down completely randomly.

Pair Corralation between Bank Mestika and Maskapai Reasuransi

Assuming the 90 days trading horizon Bank Mestika Dharma is expected to generate 1.26 times more return on investment than Maskapai Reasuransi. However, Bank Mestika is 1.26 times more volatile than Maskapai Reasuransi Indonesia. It trades about -0.07 of its potential returns per unit of risk. Maskapai Reasuransi Indonesia is currently generating about -0.27 per unit of risk. If you would invest  204,000  in Bank Mestika Dharma on September 26, 2024 and sell it today you would lose (9,500) from holding Bank Mestika Dharma or give up 4.66% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.45%
Values	Daily Returns

Bank Mestika Dharma  vs.  Maskapai Reasuransi Indonesia

Bank Mestika Dharma

Risk-Adjusted Performance

0 of 100

Very Weak

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

Maskapai Reasuransi

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Maskapai Reasuransi Indonesia 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 Bank Mestika and Maskapai Reasuransi

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

The idea behind Bank Mestika Dharma and Maskapai Reasuransi Indonesia 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.