Correlation Between Mandala Multifinance and Multi Medika

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

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

Diversification Opportunities for Mandala Multifinance and Multi Medika

-0.12

Correlation Coefficient

Mandala Multifinance  Multi Medika

Good diversification

The 3 months correlation between Mandala and Multi is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Mandala Multifinance Tbk and Multi Medika Internasional in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Multi Medika Interna and Mandala Multifinance 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 Mandala Multifinance Tbk are associated (or correlated) with Multi Medika. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Multi Medika Interna has no effect on the direction of Mandala Multifinance i.e., Mandala Multifinance and Multi Medika go up and down completely randomly.

Pair Corralation between Mandala Multifinance and Multi Medika

Assuming the 90 days trading horizon Mandala Multifinance Tbk is expected to under-perform the Multi Medika. But the stock apears to be less risky and, when comparing its historical volatility, Mandala Multifinance Tbk is 2.87 times less risky than Multi Medika. The stock trades about -0.03 of its potential returns per unit of risk. The Multi Medika Internasional is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  7,700  in Multi Medika Internasional on December 2, 2024 and sell it today you would earn a total of  5,700  from holding Multi Medika Internasional or generate 74.03% return on investment over 90 days.

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

Mandala Multifinance Tbk  vs.  Multi Medika Internasional

Mandala Multifinance Tbk

Risk-Adjusted Performance

Very Weak

Over the last 90 days Mandala Multifinance 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.

Multi Medika Interna

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Multi Medika Internasional are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Multi Medika disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Mandala Multifinance and Multi Medika

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

The idea behind Mandala Multifinance Tbk and Multi Medika Internasional 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.