Correlation Between Modern Internasional and Putra Mandiri

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

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

Diversification Opportunities for Modern Internasional and Putra Mandiri

0.75

Correlation Coefficient

Modern Internasional  Putra Mandiri

Poor diversification

The 3 months correlation between Modern and Putra is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Modern Internasional Tbk and Putra Mandiri Jembar in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Putra Mandiri Jembar and Modern Internasional 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 Modern Internasional Tbk are associated (or correlated) with Putra Mandiri. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Putra Mandiri Jembar has no effect on the direction of Modern Internasional i.e., Modern Internasional and Putra Mandiri go up and down completely randomly.

Pair Corralation between Modern Internasional and Putra Mandiri

Assuming the 90 days trading horizon Modern Internasional Tbk is expected to generate 2.38 times more return on investment than Putra Mandiri. However, Modern Internasional is 2.38 times more volatile than Putra Mandiri Jembar. It trades about -0.02 of its potential returns per unit of risk. Putra Mandiri Jembar is currently generating about -0.08 per unit of risk. If you would invest  800.00  in Modern Internasional Tbk on September 13, 2024 and sell it today you would lose (200.00) from holding Modern Internasional Tbk or give up 25.0% of portfolio value over 90 days.

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

Modern Internasional Tbk  vs.  Putra Mandiri Jembar

Modern Internasional Tbk

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Modern Internasional 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.

Putra Mandiri Jembar

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Putra Mandiri Jembar 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.

Pair Trading with Modern Internasional and Putra Mandiri

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

The idea behind Modern Internasional Tbk and Putra Mandiri Jembar 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.