Correlation Between Equity Development and PT Multi

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

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

Diversification Opportunities for Equity Development and PT Multi

0.42

Correlation Coefficient

Equity Development  PT Multi

Very weak diversification

The 3 months correlation between Equity and FOLK is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Equity Development Investment and PT Multi Garam in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PT Multi Garam and Equity Development 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 Equity Development Investment are associated (or correlated) with PT Multi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PT Multi Garam has no effect on the direction of Equity Development i.e., Equity Development and PT Multi go up and down completely randomly.

Pair Corralation between Equity Development and PT Multi

Assuming the 90 days trading horizon Equity Development Investment is expected to generate 0.66 times more return on investment than PT Multi. However, Equity Development Investment is 1.51 times less risky than PT Multi. It trades about 0.05 of its potential returns per unit of risk. PT Multi Garam is currently generating about 0.01 per unit of risk. If you would invest  5,300  in Equity Development Investment on September 13, 2024 and sell it today you would earn a total of  400.00  from holding Equity Development Investment or generate 7.55% return on investment over 90 days.

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

Equity Development Investment  vs.  PT Multi Garam

Equity Development

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Equity Development Investment are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Equity Development may actually be approaching a critical reversion point that can send shares even higher in January 2025.

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.

Pair Trading with Equity Development and PT Multi

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

The idea behind Equity Development Investment and PT Multi Garam 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.