Can any of the company-specific risk be diversified away by investing in both M Cash and Bintang Mitra 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 M Cash and Bintang Mitra into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between M Cash Integrasi and Bintang Mitra Semestaraya, you can compare the effects of market volatilities on M Cash and Bintang Mitra 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 M Cash with a short position of Bintang Mitra. Check out your portfolio center. Please also check ongoing floating volatility patterns of M Cash and Bintang Mitra.
Diversification Opportunities for M Cash and Bintang Mitra
The 3 months correlation between MCAS and Bintang is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding M Cash Integrasi and Bintang Mitra Semestaraya in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bintang Mitra Semestaraya and M Cash 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 M Cash Integrasi are associated (or correlated) with Bintang Mitra. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bintang Mitra Semestaraya has no effect on the direction of M Cash i.e., M Cash and Bintang Mitra go up and down completely randomly.
Assuming the 90 days trading horizon M Cash Integrasi is expected to under-perform the Bintang Mitra. In addition to that, M Cash is 2.34 times more volatile than Bintang Mitra Semestaraya. It trades about -0.32 of its total potential returns per unit of risk. Bintang Mitra Semestaraya is currently generating about -0.33 per unit of volatility. If you would invest 36,200 in Bintang Mitra Semestaraya on March 6, 2024 and sell it today you would lose (2,800) from holding Bintang Mitra Semestaraya or give up 7.73% of portfolio value over 90 days.
Over the last 90 days M Cash Integrasi 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 July 2024. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.
Compared to the overall equity markets, risk-adjusted returns on investments in Bintang Mitra Semestaraya are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, Bintang Mitra may actually be approaching a critical reversion point that can send shares even higher in July 2024.