Correlation Between Barito Pacific and Mnc Land

Can any of the company-specific risk be diversified away by investing in both Barito Pacific and Mnc Land 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 Barito Pacific and Mnc Land into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Barito Pacific and Mnc Land

0.23

Correlation Coefficient

Barito Pacific  Mnc Land

Modest diversification

The 3 months correlation between Barito and Mnc is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Barito Pacific Tbk and Mnc Land Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mnc Land Tbk and Barito Pacific 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 Barito Pacific Tbk are associated (or correlated) with Mnc Land. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mnc Land Tbk has no effect on the direction of Barito Pacific i.e., Barito Pacific and Mnc Land go up and down completely randomly.

Pair Corralation between Barito Pacific and Mnc Land

Assuming the 90 days trading horizon Barito Pacific Tbk is expected to under-perform the Mnc Land. In addition to that, Barito Pacific is 1.88 times more volatile than Mnc Land Tbk. It trades about -0.08 of its total potential returns per unit of risk. Mnc Land Tbk is currently generating about 0.01 per unit of volatility. If you would invest  6,100  in Mnc Land Tbk on January 29, 2024 and sell it today you would earn a total of  0.00  from holding Mnc Land Tbk or generate 0.0% return on investment over 90 days.

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

Barito Pacific Tbk  vs.  Mnc Land Tbk

Barito Pacific Tbk

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Barito Pacific 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 May 2024. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Mnc Land Tbk

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mnc Land Tbk has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Mnc Land is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Barito Pacific and Mnc Land

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

The idea behind Barito Pacific Tbk and Mnc Land 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.