Correlation Between Bekasi Fajar and Multi Hanna

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

By analyzing existing cross correlation between Bekasi Fajar Industrial and Multi Hanna Kreasindo, you can compare the effects of market volatilities on Bekasi Fajar and Multi Hanna 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 Bekasi Fajar with a short position of Multi Hanna. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bekasi Fajar and Multi Hanna.

Diversification Opportunities for Bekasi Fajar and Multi Hanna

0.54

Correlation Coefficient

Bekasi Fajar  Multi Hanna

Very weak diversification

The 3 months correlation between Bekasi and Multi is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Bekasi Fajar Industrial and Multi Hanna Kreasindo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Multi Hanna Kreasindo and Bekasi Fajar 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 Bekasi Fajar Industrial are associated (or correlated) with Multi Hanna. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Multi Hanna Kreasindo has no effect on the direction of Bekasi Fajar i.e., Bekasi Fajar and Multi Hanna go up and down completely randomly.

Pair Corralation between Bekasi Fajar and Multi Hanna

Assuming the 90 days trading horizon Bekasi Fajar Industrial is expected to under-perform the Multi Hanna. But the stock apears to be less risky and, when comparing its historical volatility, Bekasi Fajar Industrial is 1.61 times less risky than Multi Hanna. The stock trades about -0.19 of its potential returns per unit of risk. The Multi Hanna Kreasindo is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest  12,000  in Multi Hanna Kreasindo on September 4, 2024 and sell it today you would lose (1,500) from holding Multi Hanna Kreasindo or give up 12.5% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.41%
Values	Daily Returns

Bekasi Fajar Industrial  vs.  Multi Hanna Kreasindo

Bekasi Fajar Industrial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bekasi Fajar Industrial 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.

Multi Hanna Kreasindo

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Multi Hanna Kreasindo has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's forward-looking signals remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with Bekasi Fajar and Multi Hanna

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

The idea behind Bekasi Fajar Industrial and Multi Hanna Kreasindo 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.