Correlation Between PT Multi and Victoria Insurance

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

By analyzing existing cross correlation between PT Multi Garam and Victoria Insurance Tbk, you can compare the effects of market volatilities on PT Multi and Victoria Insurance 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 PT Multi with a short position of Victoria Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of PT Multi and Victoria Insurance.

Diversification Opportunities for PT Multi and Victoria Insurance

0.31

Correlation Coefficient

PT Multi  Victoria Insurance

Weak diversification

The 3 months correlation between FOLK and Victoria is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding PT Multi Garam and Victoria Insurance Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Victoria Insurance Tbk and PT Multi 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 PT Multi Garam are associated (or correlated) with Victoria Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Victoria Insurance Tbk has no effect on the direction of PT Multi i.e., PT Multi and Victoria Insurance go up and down completely randomly.

Pair Corralation between PT Multi and Victoria Insurance

Assuming the 90 days trading horizon PT Multi Garam is expected to generate 3.56 times more return on investment than Victoria Insurance. However, PT Multi is 3.56 times more volatile than Victoria Insurance Tbk. It trades about 0.01 of its potential returns per unit of risk. Victoria Insurance Tbk is currently generating about -0.13 per unit of risk. If you would invest  5,200  in PT Multi Garam on September 15, 2024 and sell it today you would lose (200.00) from holding PT Multi Garam or give up 3.85% of portfolio value over 90 days.

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

PT Multi Garam  vs.  Victoria Insurance Tbk

PT Multi Garam

Risk-Adjusted Performance

0 of 100

Very Weak

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

Victoria Insurance Tbk

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Victoria Insurance Tbk 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 PT Multi and Victoria Insurance

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

The idea behind PT Multi Garam and Victoria Insurance Tbk 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.