Correlation Between Multistrada Arah and Polychem Indonesia

Can any of the company-specific risk be diversified away by investing in both Multistrada Arah and Polychem Indonesia 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 Multistrada Arah and Polychem Indonesia into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Multistrada Arah Sarana and Polychem Indonesia Tbk, you can compare the effects of market volatilities on Multistrada Arah and Polychem Indonesia 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 Multistrada Arah with a short position of Polychem Indonesia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Multistrada Arah and Polychem Indonesia.

Diversification Opportunities for Multistrada Arah and Polychem Indonesia

0.0

Correlation Coefficient

Multistrada Arah  Polychem Indonesia

Pay attention - limited upside

The 3 months correlation between Multistrada and Polychem is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Multistrada Arah Sarana and Polychem Indonesia Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Polychem Indonesia Tbk and Multistrada Arah 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 Multistrada Arah Sarana are associated (or correlated) with Polychem Indonesia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Polychem Indonesia Tbk has no effect on the direction of Multistrada Arah i.e., Multistrada Arah and Polychem Indonesia go up and down completely randomly.

Pair Corralation between Multistrada Arah and Polychem Indonesia

If you would invest  620,000  in Multistrada Arah Sarana on September 15, 2024 and sell it today you would earn a total of  0.00  from holding Multistrada Arah Sarana or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Multistrada Arah Sarana  vs.  Polychem Indonesia Tbk

Multistrada Arah Sarana

Risk-Adjusted Performance

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Very Weak

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

Polychem Indonesia Tbk

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Polychem Indonesia Tbk 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.

Pair Trading with Multistrada Arah and Polychem Indonesia

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

The idea behind Multistrada Arah Sarana and Polychem Indonesia 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.

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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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.