Correlation Between Medikaloka Hermina and Indosat Tbk

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Can any of the company-specific risk be diversified away by investing in both Medikaloka Hermina and Indosat 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 Medikaloka Hermina and Indosat Tbk into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Medikaloka Hermina PT and Indosat Tbk, you can compare the effects of market volatilities on Medikaloka Hermina and Indosat 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 Medikaloka Hermina with a short position of Indosat Tbk. Check out your portfolio center. Please also check ongoing floating volatility patterns of Medikaloka Hermina and Indosat Tbk.

Diversification Opportunities for Medikaloka Hermina and Indosat Tbk

0.05
  Correlation Coefficient

Significant diversification

The 3 months correlation between Medikaloka and Indosat is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Medikaloka Hermina PT and Indosat Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Indosat Tbk and Medikaloka Hermina 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 Medikaloka Hermina PT are associated (or correlated) with Indosat Tbk. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Indosat Tbk has no effect on the direction of Medikaloka Hermina i.e., Medikaloka Hermina and Indosat Tbk go up and down completely randomly.

Pair Corralation between Medikaloka Hermina and Indosat Tbk

Assuming the 90 days trading horizon Medikaloka Hermina PT is expected to generate 0.19 times more return on investment than Indosat Tbk. However, Medikaloka Hermina PT is 5.31 times less risky than Indosat Tbk. It trades about -0.01 of its potential returns per unit of risk. Indosat Tbk is currently generating about -0.12 per unit of risk. If you would invest  147,000  in Medikaloka Hermina PT on September 18, 2024 and sell it today you would lose (2,500) from holding Medikaloka Hermina PT or give up 1.7% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Medikaloka Hermina PT  vs.  Indosat Tbk

 Performance 
       Timeline  
Medikaloka Hermina 

Risk-Adjusted Performance

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

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Indosat Tbk 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.

Medikaloka Hermina and Indosat Tbk Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Medikaloka Hermina and Indosat Tbk

The main advantage of trading using opposite Medikaloka Hermina and Indosat Tbk positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Medikaloka Hermina position performs unexpectedly, Indosat 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 Indosat Tbk will offset losses from the drop in Indosat Tbk's long position.
The idea behind Medikaloka Hermina PT and Indosat 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.

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