Correlation Between Jakarta Int and Multipolar Technology

Can any of the company-specific risk be diversified away by investing in both Jakarta Int and Multipolar Technology 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 Jakarta Int and Multipolar Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Jakarta Int Hotels and Multipolar Technology Tbk, you can compare the effects of market volatilities on Jakarta Int and Multipolar Technology 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 Jakarta Int with a short position of Multipolar Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jakarta Int and Multipolar Technology.

Diversification Opportunities for Jakarta Int and Multipolar Technology

0.75

Correlation Coefficient

Jakarta Int  Multipolar Technology

Poor diversification

The 3 months correlation between Jakarta and Multipolar is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Jakarta Int Hotels and Multipolar Technology Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Multipolar Technology Tbk and Jakarta Int 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 Jakarta Int Hotels are associated (or correlated) with Multipolar Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Multipolar Technology Tbk has no effect on the direction of Jakarta Int i.e., Jakarta Int and Multipolar Technology go up and down completely randomly.

Pair Corralation between Jakarta Int and Multipolar Technology

Assuming the 90 days trading horizon Jakarta Int is expected to generate 1.02 times less return on investment than Multipolar Technology. In addition to that, Jakarta Int is 1.04 times more volatile than Multipolar Technology Tbk. It trades about 0.32 of its total potential returns per unit of risk. Multipolar Technology Tbk is currently generating about 0.34 per unit of volatility. If you would invest  360,000  in Multipolar Technology Tbk on September 12, 2024 and sell it today you would earn a total of  1,705,000  from holding Multipolar Technology Tbk or generate 473.61% return on investment over 90 days.

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

Jakarta Int Hotels  vs.  Multipolar Technology Tbk

Jakarta Int Hotels

Risk-Adjusted Performance

25 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Jakarta Int Hotels are ranked lower than 25 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Jakarta Int disclosed solid returns over the last few months and may actually be approaching a breakup point.

Multipolar Technology Tbk

Risk-Adjusted Performance

26 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Multipolar Technology Tbk are ranked lower than 26 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Multipolar Technology disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Jakarta Int and Multipolar Technology

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

The idea behind Jakarta Int Hotels and Multipolar Technology 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.

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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .