Correlation Between Kabelindo Murni and PT Multi

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

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

Diversification Opportunities for Kabelindo Murni and PT Multi

0.0

Correlation Coefficient

Kabelindo Murni  PT Multi

Pay attention - limited upside

The 3 months correlation between Kabelindo and FOLK is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Kabelindo Murni Tbk 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 Kabelindo Murni 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 Kabelindo Murni Tbk 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 Kabelindo Murni i.e., Kabelindo Murni and PT Multi go up and down completely randomly.

Pair Corralation between Kabelindo Murni and PT Multi

Assuming the 90 days trading horizon Kabelindo Murni Tbk is expected to generate 0.75 times more return on investment than PT Multi. However, Kabelindo Murni Tbk is 1.33 times less risky than PT Multi. It trades about 0.03 of its potential returns per unit of risk. PT Multi Garam is currently generating about -0.02 per unit of risk. If you would invest  24,308  in Kabelindo Murni Tbk on December 2, 2024 and sell it today you would earn a total of  3,292  from holding Kabelindo Murni Tbk or generate 13.54% return on investment over 90 days.

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

Kabelindo Murni Tbk  vs.  PT Multi Garam

Kabelindo Murni Tbk

Risk-Adjusted Performance

Very Weak

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

PT Multi Garam

Risk-Adjusted Performance

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 Kabelindo Murni and PT Multi

The main advantage of trading using opposite Kabelindo Murni and PT Multi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kabelindo Murni 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 Kabelindo Murni Tbk 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.

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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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.