Correlation Between Humpuss Intermoda and Modern Internasional

Can any of the company-specific risk be diversified away by investing in both Humpuss Intermoda and Modern Internasional 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 Humpuss Intermoda and Modern Internasional into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Humpuss Intermoda Transportasi and Modern Internasional Tbk, you can compare the effects of market volatilities on Humpuss Intermoda and Modern Internasional 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 Humpuss Intermoda with a short position of Modern Internasional. Check out your portfolio center. Please also check ongoing floating volatility patterns of Humpuss Intermoda and Modern Internasional.

Diversification Opportunities for Humpuss Intermoda and Modern Internasional

-0.73

Correlation Coefficient

Humpuss Intermoda  Modern Internasional

Pay attention - limited upside

The 3 months correlation between Humpuss and Modern is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Humpuss Intermoda Transportasi and Modern Internasional Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Modern Internasional Tbk and Humpuss Intermoda 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 Humpuss Intermoda Transportasi are associated (or correlated) with Modern Internasional. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Modern Internasional Tbk has no effect on the direction of Humpuss Intermoda i.e., Humpuss Intermoda and Modern Internasional go up and down completely randomly.

Pair Corralation between Humpuss Intermoda and Modern Internasional

Assuming the 90 days trading horizon Humpuss Intermoda Transportasi is expected to generate 0.48 times more return on investment than Modern Internasional. However, Humpuss Intermoda Transportasi is 2.08 times less risky than Modern Internasional. It trades about 0.18 of its potential returns per unit of risk. Modern Internasional Tbk is currently generating about 0.04 per unit of risk. If you would invest  28,600  in Humpuss Intermoda Transportasi on September 14, 2024 and sell it today you would earn a total of  13,400  from holding Humpuss Intermoda Transportasi or generate 46.85% return on investment over 90 days.

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

Humpuss Intermoda Transportasi  vs.  Modern Internasional Tbk

Humpuss Intermoda

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Humpuss Intermoda Transportasi are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Humpuss Intermoda disclosed solid returns over the last few months and may actually be approaching a breakup point.

Modern Internasional Tbk

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Modern Internasional Tbk are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Modern Internasional disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Humpuss Intermoda and Modern Internasional

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

The idea behind Humpuss Intermoda Transportasi and Modern Internasional 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.