Correlation Between Ekadharma International and Mitrabahtera Segara

Can any of the company-specific risk be diversified away by investing in both Ekadharma International and Mitrabahtera Segara 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 Ekadharma International and Mitrabahtera Segara into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Ekadharma International Tbk and Mitrabahtera Segara Sejati, you can compare the effects of market volatilities on Ekadharma International and Mitrabahtera Segara 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 Ekadharma International with a short position of Mitrabahtera Segara. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ekadharma International and Mitrabahtera Segara.

Diversification Opportunities for Ekadharma International and Mitrabahtera Segara

0.25

Correlation Coefficient

Ekadharma International  Mitrabahtera Segara

Modest diversification

The 3 months correlation between Ekadharma and Mitrabahtera is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Ekadharma International Tbk and Mitrabahtera Segara Sejati in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mitrabahtera Segara and Ekadharma International 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 Ekadharma International Tbk are associated (or correlated) with Mitrabahtera Segara. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mitrabahtera Segara has no effect on the direction of Ekadharma International i.e., Ekadharma International and Mitrabahtera Segara go up and down completely randomly.

Pair Corralation between Ekadharma International and Mitrabahtera Segara

Assuming the 90 days trading horizon Ekadharma International Tbk is expected to under-perform the Mitrabahtera Segara. But the stock apears to be less risky and, when comparing its historical volatility, Ekadharma International Tbk is 2.96 times less risky than Mitrabahtera Segara. The stock trades about -0.14 of its potential returns per unit of risk. The Mitrabahtera Segara Sejati is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  104,000  in Mitrabahtera Segara Sejati on September 16, 2024 and sell it today you would earn a total of  5,000  from holding Mitrabahtera Segara Sejati or generate 4.81% return on investment over 90 days.

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

Ekadharma International Tbk  vs.  Mitrabahtera Segara Sejati

Ekadharma International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ekadharma International 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.

Mitrabahtera Segara

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Mitrabahtera Segara Sejati are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Mitrabahtera Segara may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Ekadharma International and Mitrabahtera Segara

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

The idea behind Ekadharma International Tbk and Mitrabahtera Segara Sejati 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.