Correlation Between Kirana Megatara and Maha Properti

Can any of the company-specific risk be diversified away by investing in both Kirana Megatara and Maha Properti 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 Kirana Megatara and Maha Properti into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Kirana Megatara Tbk and Maha Properti Indonesia, you can compare the effects of market volatilities on Kirana Megatara and Maha Properti 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 Kirana Megatara with a short position of Maha Properti. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kirana Megatara and Maha Properti.

Diversification Opportunities for Kirana Megatara and Maha Properti

0.79

Correlation Coefficient

Kirana Megatara  Maha Properti

Poor diversification

The 3 months correlation between Kirana and Maha is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Kirana Megatara Tbk and Maha Properti Indonesia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Maha Properti Indonesia and Kirana Megatara 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 Kirana Megatara Tbk are associated (or correlated) with Maha Properti. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Maha Properti Indonesia has no effect on the direction of Kirana Megatara i.e., Kirana Megatara and Maha Properti go up and down completely randomly.

Pair Corralation between Kirana Megatara and Maha Properti

Assuming the 90 days trading horizon Kirana Megatara Tbk is expected to generate 3.0 times more return on investment than Maha Properti. However, Kirana Megatara is 3.0 times more volatile than Maha Properti Indonesia. It trades about 0.15 of its potential returns per unit of risk. Maha Properti Indonesia is currently generating about 0.37 per unit of risk. If you would invest  22,800  in Kirana Megatara Tbk on September 13, 2024 and sell it today you would earn a total of  9,200  from holding Kirana Megatara Tbk or generate 40.35% return on investment over 90 days.

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

Kirana Megatara Tbk  vs.  Maha Properti Indonesia

Kirana Megatara Tbk

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Kirana Megatara Tbk are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Kirana Megatara disclosed solid returns over the last few months and may actually be approaching a breakup point.

Maha Properti Indonesia

Risk-Adjusted Performance

28 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Maha Properti Indonesia are ranked lower than 28 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Maha Properti disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Kirana Megatara and Maha Properti

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

The idea behind Kirana Megatara Tbk and Maha Properti Indonesia 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..