Correlation Between Monument Mining and BAKRIE SUMATERA

Can any of the company-specific risk be diversified away by investing in both Monument Mining and BAKRIE SUMATERA 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 Monument Mining and BAKRIE SUMATERA into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Monument Mining Limited and BAKRIE SUMATERA PL, you can compare the effects of market volatilities on Monument Mining and BAKRIE SUMATERA 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 Monument Mining with a short position of BAKRIE SUMATERA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Monument Mining and BAKRIE SUMATERA.

Diversification Opportunities for Monument Mining and BAKRIE SUMATERA

-0.62

Correlation Coefficient

Monument Mining  BAKRIE SUMATERA

Excellent diversification

The 3 months correlation between Monument and BAKRIE is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Monument Mining Limited and BAKRIE SUMATERA PL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BAKRIE SUMATERA PL and Monument Mining 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 Monument Mining Limited are associated (or correlated) with BAKRIE SUMATERA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BAKRIE SUMATERA PL has no effect on the direction of Monument Mining i.e., Monument Mining and BAKRIE SUMATERA go up and down completely randomly.

Pair Corralation between Monument Mining and BAKRIE SUMATERA

Assuming the 90 days trading horizon Monument Mining Limited is expected to under-perform the BAKRIE SUMATERA. But the stock apears to be less risky and, when comparing its historical volatility, Monument Mining Limited is 8.78 times less risky than BAKRIE SUMATERA. The stock trades about -0.03 of its potential returns per unit of risk. The BAKRIE SUMATERA PL is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  0.20  in BAKRIE SUMATERA PL on April 25, 2025 and sell it today you would earn a total of  0.80  from holding BAKRIE SUMATERA PL or generate 400.0% return on investment over 90 days.

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

Monument Mining Limited  vs.  BAKRIE SUMATERA PL

Monument Mining

Risk-Adjusted Performance

Very Weak

Over the last 90 days Monument Mining Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

BAKRIE SUMATERA PL

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in BAKRIE SUMATERA PL are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, BAKRIE SUMATERA unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Monument Mining and BAKRIE SUMATERA

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

The idea behind Monument Mining Limited and BAKRIE SUMATERA PL 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.