Correlation Between Petrosea Tbk and PT MNC

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

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

Diversification Opportunities for Petrosea Tbk and PT MNC

0.64

Correlation Coefficient

Petrosea Tbk  PT MNC

Poor diversification

The 3 months correlation between Petrosea and IATA is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Petrosea Tbk and PT MNC Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PT MNC Energy and Petrosea Tbk 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 Petrosea Tbk are associated (or correlated) with PT MNC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PT MNC Energy has no effect on the direction of Petrosea Tbk i.e., Petrosea Tbk and PT MNC go up and down completely randomly.

Pair Corralation between Petrosea Tbk and PT MNC

Assuming the 90 days trading horizon Petrosea Tbk is expected to generate 1.11 times more return on investment than PT MNC. However, Petrosea Tbk is 1.11 times more volatile than PT MNC Energy. It trades about 0.29 of its potential returns per unit of risk. PT MNC Energy is currently generating about 0.06 per unit of risk. If you would invest  1,420,000  in Petrosea Tbk on September 25, 2024 and sell it today you would earn a total of  1,385,000  from holding Petrosea Tbk or generate 97.54% return on investment over 90 days.

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

Petrosea Tbk  vs.  PT MNC Energy

Petrosea Tbk

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Petrosea Tbk are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Petrosea Tbk disclosed solid returns over the last few months and may actually be approaching a breakup point.

PT MNC Energy

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in PT MNC Energy are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, PT MNC disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Petrosea Tbk and PT MNC

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

The idea behind Petrosea Tbk and PT MNC Energy 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.