Correlation Between Multi Indocitra and Perdana Bangun

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

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

Diversification Opportunities for Multi Indocitra and Perdana Bangun

-0.25

Correlation Coefficient

Multi Indocitra  Perdana Bangun

Very good diversification

The 3 months correlation between Multi and Perdana is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Multi Indocitra Tbk and Perdana Bangun Pusaka in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Perdana Bangun Pusaka and Multi Indocitra 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 Indocitra Tbk are associated (or correlated) with Perdana Bangun. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Perdana Bangun Pusaka has no effect on the direction of Multi Indocitra i.e., Multi Indocitra and Perdana Bangun go up and down completely randomly.

Pair Corralation between Multi Indocitra and Perdana Bangun

Assuming the 90 days trading horizon Multi Indocitra Tbk is expected to under-perform the Perdana Bangun. But the stock apears to be less risky and, when comparing its historical volatility, Multi Indocitra Tbk is 2.22 times less risky than Perdana Bangun. The stock trades about -0.07 of its potential returns per unit of risk. The Perdana Bangun Pusaka is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  150,000  in Perdana Bangun Pusaka on December 29, 2024 and sell it today you would lose (22,000) from holding Perdana Bangun Pusaka or give up 14.67% of portfolio value over 90 days.

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

Multi Indocitra Tbk  vs.  Perdana Bangun Pusaka

Multi Indocitra Tbk

Risk-Adjusted Performance

Very Weak

Over the last 90 days Multi Indocitra Tbk has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's forward-looking signals remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Perdana Bangun Pusaka

Risk-Adjusted Performance

Very Weak

Over the last 90 days Perdana Bangun Pusaka has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Perdana Bangun 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 Indocitra and Perdana Bangun

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

The idea behind Multi Indocitra Tbk and Perdana Bangun Pusaka 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.