Correlation Between Kioson Komersial and Megapower Makmur

Can any of the company-specific risk be diversified away by investing in both Kioson Komersial and Megapower Makmur 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 Kioson Komersial and Megapower Makmur into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Kioson Komersial Indonesia and Megapower Makmur TBK, you can compare the effects of market volatilities on Kioson Komersial and Megapower Makmur 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 Kioson Komersial with a short position of Megapower Makmur. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kioson Komersial and Megapower Makmur.

Diversification Opportunities for Kioson Komersial and Megapower Makmur

-0.22

Correlation Coefficient

Kioson Komersial  Megapower Makmur

Very good diversification

The 3 months correlation between Kioson and Megapower is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Kioson Komersial Indonesia and Megapower Makmur TBK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Megapower Makmur TBK and Kioson Komersial 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 Kioson Komersial Indonesia are associated (or correlated) with Megapower Makmur. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Megapower Makmur TBK has no effect on the direction of Kioson Komersial i.e., Kioson Komersial and Megapower Makmur go up and down completely randomly.

Pair Corralation between Kioson Komersial and Megapower Makmur

Assuming the 90 days trading horizon Kioson Komersial is expected to generate 4.56 times less return on investment than Megapower Makmur. But when comparing it to its historical volatility, Kioson Komersial Indonesia is 1.4 times less risky than Megapower Makmur. It trades about 0.02 of its potential returns per unit of risk. Megapower Makmur TBK is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  7,400  in Megapower Makmur TBK on September 13, 2024 and sell it today you would earn a total of  1,000.00  from holding Megapower Makmur TBK or generate 13.51% return on investment over 90 days.

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

Kioson Komersial Indonesia  vs.  Megapower Makmur TBK

Kioson Komersial Ind

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Kioson Komersial Indonesia are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent forward-looking signals, Kioson Komersial is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Megapower Makmur TBK

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Megapower Makmur TBK are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Megapower Makmur disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Kioson Komersial and Megapower Makmur

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

The idea behind Kioson Komersial Indonesia and Megapower Makmur 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.

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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.