Correlation Between Bank Ina and Multistrada Arah

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

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

Diversification Opportunities for Bank Ina and Multistrada Arah

0.0

Correlation Coefficient

Bank Ina  Multistrada Arah

Pay attention - limited upside

The 3 months correlation between Bank and Multistrada is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Bank Ina Perdana 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 Bank Ina 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 Bank Ina Perdana 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 Bank Ina i.e., Bank Ina and Multistrada Arah go up and down completely randomly.

Pair Corralation between Bank Ina and Multistrada Arah

Assuming the 90 days trading horizon Bank Ina is expected to generate 22.34 times less return on investment than Multistrada Arah. But when comparing it to its historical volatility, Bank Ina Perdana is 4.38 times less risky than Multistrada Arah. It trades about 0.01 of its potential returns per unit of risk. Multistrada Arah Sarana is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  221,593  in Multistrada Arah Sarana on September 12, 2024 and sell it today you would earn a total of  398,407  from holding Multistrada Arah Sarana or generate 179.79% return on investment over 90 days.

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

Bank Ina Perdana  vs.  Multistrada Arah Sarana

Bank Ina Perdana

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bank Ina Perdana has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Bank Ina is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the 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 Bank Ina and Multistrada Arah

The main advantage of trading using opposite Bank Ina and Multistrada Arah positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank Ina 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 Bank Ina Perdana 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.

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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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.