Correlation Between Multi Prima and Dharma Polimetal

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

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

Diversification Opportunities for Multi Prima and Dharma Polimetal

-0.03

Correlation Coefficient

Multi Prima  Dharma Polimetal

Good diversification

The 3 months correlation between Multi and Dharma is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Multi Prima Sejahtera and Dharma Polimetal Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dharma Polimetal Tbk and Multi Prima 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 Multi Prima Sejahtera are associated (or correlated) with Dharma Polimetal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dharma Polimetal Tbk has no effect on the direction of Multi Prima i.e., Multi Prima and Dharma Polimetal go up and down completely randomly.

Pair Corralation between Multi Prima and Dharma Polimetal

Assuming the 90 days trading horizon Multi Prima Sejahtera is expected to under-perform the Dharma Polimetal. In addition to that, Multi Prima is 1.51 times more volatile than Dharma Polimetal Tbk. It trades about -0.01 of its total potential returns per unit of risk. Dharma Polimetal Tbk is currently generating about 0.03 per unit of volatility. If you would invest  92,000  in Dharma Polimetal Tbk on December 30, 2024 and sell it today you would earn a total of  2,000  from holding Dharma Polimetal Tbk or generate 2.17% return on investment over 90 days.

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

Multi Prima Sejahtera  vs.  Dharma Polimetal Tbk

Multi Prima Sejahtera

Risk-Adjusted Performance

Very Weak

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

Dharma Polimetal Tbk

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Dharma Polimetal Tbk are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent forward-looking signals, Dharma Polimetal 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 Multi Prima and Dharma Polimetal

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

The idea behind Multi Prima Sejahtera and Dharma Polimetal 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.