Correlation Between Multi Indocitra and Multi Makmur

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

Diversification Opportunities for Multi Indocitra and Multi Makmur

-0.32

Correlation Coefficient

Multi Indocitra  Multi Makmur

Very good diversification

The 3 months correlation between Multi and Multi is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Multi Indocitra Tbk and Multi Makmur Lemindo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Multi Makmur Lemindo 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 Makmur. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Multi Makmur Lemindo has no effect on the direction of Multi Indocitra i.e., Multi Indocitra and Multi Makmur go up and down completely randomly.

Pair Corralation between Multi Indocitra and Multi Makmur

Assuming the 90 days trading horizon Multi Indocitra Tbk is expected to under-perform the Multi Makmur. But the stock apears to be less risky and, when comparing its historical volatility, Multi Indocitra Tbk is 2.36 times less risky than Multi Makmur. The stock trades about -0.07 of its potential returns per unit of risk. The Multi Makmur Lemindo is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  1,100  in Multi Makmur Lemindo on December 30, 2024 and sell it today you would earn a total of  900.00  from holding Multi Makmur Lemindo or generate 81.82% return on investment over 90 days.

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

Multi Indocitra Tbk  vs.  Multi Makmur Lemindo

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 Makmur Lemindo

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Multi Makmur Lemindo are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Multi Makmur disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Multi Indocitra and Multi Makmur

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

The idea behind Multi Indocitra Tbk and Multi Makmur Lemindo 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.