Correlation Between Multi Indocitra and Multi Hanna

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

Diversification Opportunities for Multi Indocitra and Multi Hanna

0.14

Correlation Coefficient

Multi Indocitra  Multi Hanna

Average diversification

The 3 months correlation between Multi and Multi is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Multi Indocitra Tbk and Multi Hanna Kreasindo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Multi Hanna Kreasindo 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 Multi Hanna. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Multi Hanna Kreasindo has no effect on the direction of Multi Indocitra i.e., Multi Indocitra and Multi Hanna go up and down completely randomly.

Pair Corralation between Multi Indocitra and Multi Hanna

Assuming the 90 days trading horizon Multi Indocitra Tbk is expected to under-perform the Multi Hanna. But the stock apears to be less risky and, when comparing its historical volatility, Multi Indocitra Tbk is 1.11 times less risky than Multi Hanna. The stock trades about -0.07 of its potential returns per unit of risk. The Multi Hanna Kreasindo is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  9,500  in Multi Hanna Kreasindo on December 30, 2024 and sell it today you would lose (300.00) from holding Multi Hanna Kreasindo or give up 3.16% of portfolio value over 90 days.

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

Multi Indocitra Tbk  vs.  Multi Hanna Kreasindo

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.

Multi Hanna Kreasindo

Risk-Adjusted Performance

Very Weak

Over the last 90 days Multi Hanna Kreasindo has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Multi Hanna 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 Multi Hanna

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

The idea behind Multi Indocitra Tbk and Multi Hanna Kreasindo 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.