Correlation Between Hanjaya Mandala and Multi Bintang

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

By analyzing existing cross correlation between Hanjaya Mandala Sampoerna and Multi Bintang Indonesia, you can compare the effects of market volatilities on Hanjaya Mandala and Multi Bintang 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 Hanjaya Mandala with a short position of Multi Bintang. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hanjaya Mandala and Multi Bintang.

Diversification Opportunities for Hanjaya Mandala and Multi Bintang

-0.79

Correlation Coefficient

Hanjaya Mandala  Multi Bintang

Pay attention - limited upside

The 3 months correlation between Hanjaya and Multi is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding Hanjaya Mandala Sampoerna and Multi Bintang Indonesia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Multi Bintang Indonesia and Hanjaya Mandala 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 Hanjaya Mandala Sampoerna are associated (or correlated) with Multi Bintang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Multi Bintang Indonesia has no effect on the direction of Hanjaya Mandala i.e., Hanjaya Mandala and Multi Bintang go up and down completely randomly.

Pair Corralation between Hanjaya Mandala and Multi Bintang

Assuming the 90 days trading horizon Hanjaya Mandala Sampoerna is expected to under-perform the Multi Bintang. In addition to that, Hanjaya Mandala is 1.44 times more volatile than Multi Bintang Indonesia. It trades about -0.06 of its total potential returns per unit of risk. Multi Bintang Indonesia is currently generating about 0.07 per unit of volatility. If you would invest  584,888  in Multi Bintang Indonesia on August 31, 2024 and sell it today you would earn a total of  37,612  from holding Multi Bintang Indonesia or generate 6.43% return on investment over 90 days.

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

Hanjaya Mandala Sampoerna  vs.  Multi Bintang Indonesia

Hanjaya Mandala Sampoerna

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hanjaya Mandala Sampoerna 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.

Multi Bintang Indonesia

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Multi Bintang Indonesia are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Multi Bintang may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Hanjaya Mandala and Multi Bintang

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

The idea behind Hanjaya Mandala Sampoerna and Multi Bintang Indonesia 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.