Correlation Between Mustika Ratu and Prasidha Aneka

Can any of the company-specific risk be diversified away by investing in both Mustika Ratu and Prasidha Aneka 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 Mustika Ratu and Prasidha Aneka into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Mustika Ratu Tbk and Prasidha Aneka Niaga, you can compare the effects of market volatilities on Mustika Ratu and Prasidha Aneka 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 Mustika Ratu with a short position of Prasidha Aneka. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mustika Ratu and Prasidha Aneka.

Diversification Opportunities for Mustika Ratu and Prasidha Aneka

0.79

Correlation Coefficient

Mustika Ratu  Prasidha Aneka

Poor diversification

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

Pair Corralation between Mustika Ratu and Prasidha Aneka

Assuming the 90 days trading horizon Mustika Ratu Tbk is expected to under-perform the Prasidha Aneka. In addition to that, Mustika Ratu is 1.13 times more volatile than Prasidha Aneka Niaga. It trades about -0.23 of its total potential returns per unit of risk. Prasidha Aneka Niaga is currently generating about -0.09 per unit of volatility. If you would invest  8,900  in Prasidha Aneka Niaga on September 16, 2024 and sell it today you would lose (900.00) from holding Prasidha Aneka Niaga or give up 10.11% of portfolio value over 90 days.

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

Mustika Ratu Tbk  vs.  Prasidha Aneka Niaga

Mustika Ratu Tbk

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mustika Ratu Tbk 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.

Prasidha Aneka Niaga

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Prasidha Aneka Niaga 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.

Pair Trading with Mustika Ratu and Prasidha Aneka

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

The idea behind Mustika Ratu Tbk and Prasidha Aneka Niaga 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.