Correlation Between Greenwood Sejahtera and Metropolitan Kentjana

Can any of the company-specific risk be diversified away by investing in both Greenwood Sejahtera and Metropolitan Kentjana 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 Greenwood Sejahtera and Metropolitan Kentjana into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Greenwood Sejahtera and Metropolitan Kentjana

0.81

Correlation Coefficient

Greenwood Sejahtera  Metropolitan Kentjana

Very poor diversification

The 3 months correlation between Greenwood and Metropolitan is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Greenwood Sejahtera Tbk and Metropolitan Kentjana Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metropolitan Kentjana Tbk and Greenwood Sejahtera 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 Greenwood Sejahtera Tbk are associated (or correlated) with Metropolitan Kentjana. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metropolitan Kentjana Tbk has no effect on the direction of Greenwood Sejahtera i.e., Greenwood Sejahtera and Metropolitan Kentjana go up and down completely randomly.

Pair Corralation between Greenwood Sejahtera and Metropolitan Kentjana

Assuming the 90 days trading horizon Greenwood Sejahtera Tbk is expected to generate 1.25 times more return on investment than Metropolitan Kentjana. However, Greenwood Sejahtera is 1.25 times more volatile than Metropolitan Kentjana Tbk. It trades about -0.07 of its potential returns per unit of risk. Metropolitan Kentjana Tbk is currently generating about -0.11 per unit of risk. If you would invest  14,300  in Greenwood Sejahtera Tbk on September 12, 2024 and sell it today you would lose (900.00) from holding Greenwood Sejahtera Tbk or give up 6.29% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.41%
Values	Daily Returns

Greenwood Sejahtera Tbk  vs.  Metropolitan Kentjana Tbk

Greenwood Sejahtera Tbk

Risk-Adjusted Performance

0 of 100

Very Weak

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

Metropolitan Kentjana Tbk

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Metropolitan Kentjana 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 Greenwood Sejahtera and Metropolitan Kentjana

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

The idea behind Greenwood Sejahtera Tbk and Metropolitan Kentjana 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.