Correlation Between Arwana Citramulia and Megapolitan Developments

Can any of the company-specific risk be diversified away by investing in both Arwana Citramulia and Megapolitan Developments 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 Arwana Citramulia and Megapolitan Developments into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Arwana Citramulia and Megapolitan Developments

0.0

Correlation Coefficient

Arwana Citramulia  Megapolitan Developments

Pay attention - limited upside

The 3 months correlation between Arwana and Megapolitan is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Arwana Citramulia Tbk and Megapolitan Developments Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Megapolitan Developments and Arwana Citramulia 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 Arwana Citramulia Tbk are associated (or correlated) with Megapolitan Developments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Megapolitan Developments has no effect on the direction of Arwana Citramulia i.e., Arwana Citramulia and Megapolitan Developments go up and down completely randomly.

Pair Corralation between Arwana Citramulia and Megapolitan Developments

Assuming the 90 days trading horizon Arwana Citramulia Tbk is expected to generate 0.39 times more return on investment than Megapolitan Developments. However, Arwana Citramulia Tbk is 2.56 times less risky than Megapolitan Developments. It trades about -0.07 of its potential returns per unit of risk. Megapolitan Developments Tbk is currently generating about -0.37 per unit of risk. If you would invest  67,500  in Arwana Citramulia Tbk on February 20, 2024 and sell it today you would lose (1,000.00) from holding Arwana Citramulia Tbk or give up 1.48% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Arwana Citramulia Tbk  vs.  Megapolitan Developments Tbk

Arwana Citramulia Tbk

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Arwana Citramulia Tbk are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, Arwana Citramulia may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Megapolitan Developments

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Megapolitan Developments 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 basic indicators remain quite persistent which may send shares a bit higher in June 2024. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Arwana Citramulia and Megapolitan Developments

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

The idea behind Arwana Citramulia Tbk and Megapolitan Developments Tbk 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.