Correlation Between Pelayaran Nasional and Merdeka Copper

Can any of the company-specific risk be diversified away by investing in both Pelayaran Nasional and Merdeka Copper 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 Pelayaran Nasional and Merdeka Copper into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Pelayaran Nasional Bina and Merdeka Copper Gold, you can compare the effects of market volatilities on Pelayaran Nasional and Merdeka Copper 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 Pelayaran Nasional with a short position of Merdeka Copper. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pelayaran Nasional and Merdeka Copper.

Diversification Opportunities for Pelayaran Nasional and Merdeka Copper

0.45

Correlation Coefficient

Pelayaran Nasional  Merdeka Copper

Very weak diversification

The 3 months correlation between Pelayaran and Merdeka is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Pelayaran Nasional Bina and Merdeka Copper Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Merdeka Copper Gold and Pelayaran Nasional 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 Pelayaran Nasional Bina are associated (or correlated) with Merdeka Copper. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Merdeka Copper Gold has no effect on the direction of Pelayaran Nasional i.e., Pelayaran Nasional and Merdeka Copper go up and down completely randomly.

Pair Corralation between Pelayaran Nasional and Merdeka Copper

Assuming the 90 days trading horizon Pelayaran Nasional is expected to generate 1.83 times less return on investment than Merdeka Copper. But when comparing it to its historical volatility, Pelayaran Nasional Bina is 1.77 times less risky than Merdeka Copper. It trades about 0.16 of its potential returns per unit of risk. Merdeka Copper Gold is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  229,000  in Merdeka Copper Gold on January 29, 2024 and sell it today you would earn a total of  25,000  from holding Merdeka Copper Gold or generate 10.92% return on investment over 90 days.

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

Pelayaran Nasional Bina  vs.  Merdeka Copper Gold

Pelayaran Nasional Bina

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Pelayaran Nasional Bina are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, Pelayaran Nasional may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Merdeka Copper Gold

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Merdeka Copper Gold has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's basic indicators 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 Pelayaran Nasional and Merdeka Copper

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

The idea behind Pelayaran Nasional Bina and Merdeka Copper Gold 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.