Correlation Between Hero Supermarket and Mitra Keluarga

Can any of the company-specific risk be diversified away by investing in both Hero Supermarket and Mitra Keluarga 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 Hero Supermarket and Mitra Keluarga into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Hero Supermarket Tbk and Mitra Keluarga Karyasehat, you can compare the effects of market volatilities on Hero Supermarket and Mitra Keluarga 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 Hero Supermarket with a short position of Mitra Keluarga. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hero Supermarket and Mitra Keluarga.

Diversification Opportunities for Hero Supermarket and Mitra Keluarga

0.53

Correlation Coefficient

Hero Supermarket  Mitra Keluarga

Very weak diversification

The 3 months correlation between Hero and Mitra is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Hero Supermarket Tbk and Mitra Keluarga Karyasehat in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mitra Keluarga Karyasehat and Hero Supermarket 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 Hero Supermarket Tbk are associated (or correlated) with Mitra Keluarga. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mitra Keluarga Karyasehat has no effect on the direction of Hero Supermarket i.e., Hero Supermarket and Mitra Keluarga go up and down completely randomly.

Pair Corralation between Hero Supermarket and Mitra Keluarga

Assuming the 90 days trading horizon Hero Supermarket Tbk is expected to under-perform the Mitra Keluarga. In addition to that, Hero Supermarket is 1.33 times more volatile than Mitra Keluarga Karyasehat. It trades about -0.08 of its total potential returns per unit of risk. Mitra Keluarga Karyasehat is currently generating about -0.09 per unit of volatility. If you would invest  295,000  in Mitra Keluarga Karyasehat on September 3, 2024 and sell it today you would lose (33,000) from holding Mitra Keluarga Karyasehat or give up 11.19% of portfolio value over 90 days.

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

Hero Supermarket Tbk  vs.  Mitra Keluarga Karyasehat

Hero Supermarket Tbk

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hero Supermarket 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.

Mitra Keluarga Karyasehat

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mitra Keluarga Karyasehat 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 Hero Supermarket and Mitra Keluarga

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

The idea behind Hero Supermarket Tbk and Mitra Keluarga Karyasehat 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.