Correlation Between Multipolar Tbk and Matahari Putra

Can any of the company-specific risk be diversified away by investing in both Multipolar Tbk and Matahari Putra 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 Multipolar Tbk and Matahari Putra into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Multipolar Tbk and Matahari Putra Prima, you can compare the effects of market volatilities on Multipolar Tbk and Matahari Putra 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 Multipolar Tbk with a short position of Matahari Putra. Check out your portfolio center. Please also check ongoing floating volatility patterns of Multipolar Tbk and Matahari Putra.

Diversification Opportunities for Multipolar Tbk and Matahari Putra

0.96

Correlation Coefficient

Multipolar Tbk  Matahari Putra

Almost no diversification

The 3 months correlation between Multipolar and Matahari is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Multipolar Tbk and Matahari Putra Prima in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Matahari Putra Prima and Multipolar Tbk 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 Multipolar Tbk are associated (or correlated) with Matahari Putra. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Matahari Putra Prima has no effect on the direction of Multipolar Tbk i.e., Multipolar Tbk and Matahari Putra go up and down completely randomly.

Pair Corralation between Multipolar Tbk and Matahari Putra

Assuming the 90 days trading horizon Multipolar Tbk is expected to generate 1.2 times more return on investment than Matahari Putra. However, Multipolar Tbk is 1.2 times more volatile than Matahari Putra Prima. It trades about 0.11 of its potential returns per unit of risk. Matahari Putra Prima is currently generating about 0.08 per unit of risk. If you would invest  7,300  in Multipolar Tbk on September 2, 2024 and sell it today you would earn a total of  3,500  from holding Multipolar Tbk or generate 47.95% return on investment over 90 days.

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

Multipolar Tbk  vs.  Matahari Putra Prima

Multipolar Tbk

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Multipolar Tbk are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Multipolar Tbk disclosed solid returns over the last few months and may actually be approaching a breakup point.

Matahari Putra Prima

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Matahari Putra Prima are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Matahari Putra disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Multipolar Tbk and Matahari Putra

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

The idea behind Multipolar Tbk and Matahari Putra Prima 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.