Correlation Between Polychem Indonesia and Multistrada Arah

Can any of the company-specific risk be diversified away by investing in both Polychem Indonesia and Multistrada Arah 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 Polychem Indonesia and Multistrada Arah into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Polychem Indonesia Tbk and Multistrada Arah Sarana, you can compare the effects of market volatilities on Polychem Indonesia and Multistrada Arah 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 Polychem Indonesia with a short position of Multistrada Arah. Check out your portfolio center. Please also check ongoing floating volatility patterns of Polychem Indonesia and Multistrada Arah.

Diversification Opportunities for Polychem Indonesia and Multistrada Arah

0.0

Correlation Coefficient

Polychem Indonesia  Multistrada Arah

Pay attention - limited upside

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

Pair Corralation between Polychem Indonesia and Multistrada Arah

If you would invest  620,000  in Multistrada Arah Sarana on September 14, 2024 and sell it today you would earn a total of  0.00  from holding Multistrada Arah Sarana or generate 0.0% return on investment over 90 days.

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

Polychem Indonesia Tbk  vs.  Multistrada Arah Sarana

Polychem Indonesia Tbk

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Polychem Indonesia 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 forward-looking signals remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Multistrada Arah Sarana

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Multistrada Arah Sarana has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Multistrada Arah 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 Polychem Indonesia and Multistrada Arah

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

The idea behind Polychem Indonesia Tbk and Multistrada Arah Sarana 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.

Check out your portfolio center.

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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.