Correlation Between Batulicin Nusantara and Multi Medika

Can any of the company-specific risk be diversified away by investing in both Batulicin Nusantara and Multi Medika 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 Batulicin Nusantara and Multi Medika into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Batulicin Nusantara Maritim and Multi Medika Internasional, you can compare the effects of market volatilities on Batulicin Nusantara and Multi Medika 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 Batulicin Nusantara with a short position of Multi Medika. Check out your portfolio center. Please also check ongoing floating volatility patterns of Batulicin Nusantara and Multi Medika.

Diversification Opportunities for Batulicin Nusantara and Multi Medika

0.86

Correlation Coefficient

Batulicin Nusantara  Multi Medika

Very poor diversification

The 3 months correlation between Batulicin and Multi is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Batulicin Nusantara Maritim and Multi Medika Internasional in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Multi Medika Interna and Batulicin Nusantara 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 Batulicin Nusantara Maritim are associated (or correlated) with Multi Medika. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Multi Medika Interna has no effect on the direction of Batulicin Nusantara i.e., Batulicin Nusantara and Multi Medika go up and down completely randomly.

Pair Corralation between Batulicin Nusantara and Multi Medika

Assuming the 90 days trading horizon Batulicin Nusantara Maritim is expected to generate 0.51 times more return on investment than Multi Medika. However, Batulicin Nusantara Maritim is 1.97 times less risky than Multi Medika. It trades about 0.11 of its potential returns per unit of risk. Multi Medika Internasional is currently generating about 0.04 per unit of risk. If you would invest  15,600  in Batulicin Nusantara Maritim on October 27, 2024 and sell it today you would earn a total of  25,400  from holding Batulicin Nusantara Maritim or generate 162.82% return on investment over 90 days.

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

Batulicin Nusantara Maritim  vs.  Multi Medika Internasional

Batulicin Nusantara

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Batulicin Nusantara Maritim are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Batulicin Nusantara disclosed solid returns over the last few months and may actually be approaching a breakup point.

Multi Medika Interna

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Multi Medika Internasional are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Multi Medika disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Batulicin Nusantara and Multi Medika

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

The idea behind Batulicin Nusantara Maritim and Multi Medika Internasional 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.