Correlation Between Mahkota Group and PT Dewi

Can any of the company-specific risk be diversified away by investing in both Mahkota Group and PT Dewi 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 Mahkota Group and PT Dewi into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Mahkota Group Tbk and PT Dewi Shri, you can compare the effects of market volatilities on Mahkota Group and PT Dewi 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 Mahkota Group with a short position of PT Dewi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mahkota Group and PT Dewi.

Diversification Opportunities for Mahkota Group and PT Dewi

0.2

Correlation Coefficient

Mahkota Group  PT Dewi

Modest diversification

The 3 months correlation between Mahkota and DEWI is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Mahkota Group Tbk and PT Dewi Shri in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PT Dewi Shri and Mahkota Group 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 Mahkota Group Tbk are associated (or correlated) with PT Dewi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PT Dewi Shri has no effect on the direction of Mahkota Group i.e., Mahkota Group and PT Dewi go up and down completely randomly.

Pair Corralation between Mahkota Group and PT Dewi

Assuming the 90 days trading horizon Mahkota Group Tbk is expected to generate 0.86 times more return on investment than PT Dewi. However, Mahkota Group Tbk is 1.16 times less risky than PT Dewi. It trades about 0.21 of its potential returns per unit of risk. PT Dewi Shri is currently generating about 0.01 per unit of risk. If you would invest  66,500  in Mahkota Group Tbk on September 14, 2024 and sell it today you would earn a total of  3,000  from holding Mahkota Group Tbk or generate 4.51% return on investment over 90 days.

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

Mahkota Group Tbk  vs.  PT Dewi Shri

Mahkota Group Tbk

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Mahkota Group Tbk are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent forward-looking signals, Mahkota Group is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

PT Dewi Shri

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in PT Dewi Shri are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, PT Dewi may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Mahkota Group and PT Dewi

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

The idea behind Mahkota Group Tbk and PT Dewi Shri 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.