Correlation Between Multistrada Arah and PT Indonesia

Can any of the company-specific risk be diversified away by investing in both Multistrada Arah and PT 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 PT 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 PT Indonesia Kendaraan, you can compare the effects of market volatilities on Multistrada Arah and PT 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 PT Indonesia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Multistrada Arah and PT Indonesia.

Diversification Opportunities for Multistrada Arah and PT Indonesia

0.0

Correlation Coefficient

Multistrada Arah  PT Indonesia

Pay attention - limited upside

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

Pair Corralation between Multistrada Arah and PT Indonesia

If you would invest  71,507  in PT Indonesia Kendaraan on December 2, 2024 and sell it today you would lose (7.00) from holding PT Indonesia Kendaraan or give up 0.01% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	98.31%
Values	Daily Returns

Multistrada Arah Sarana  vs.  PT Indonesia Kendaraan

Multistrada Arah Sarana

Risk-Adjusted Performance

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.

PT Indonesia Kendaraan

Risk-Adjusted Performance

Very Weak

Over the last 90 days PT Indonesia Kendaraan has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, PT Indonesia 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 Multistrada Arah and PT Indonesia

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

The idea behind Multistrada Arah Sarana and PT Indonesia Kendaraan 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.