Correlation Between Multipolar Technology and Sentral Mitra

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

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

Diversification Opportunities for Multipolar Technology and Sentral Mitra

-0.08

Correlation Coefficient

Multipolar Technology  Sentral Mitra

Good diversification

The 3 months correlation between Multipolar and Sentral is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Multipolar Technology Tbk and Sentral Mitra Informatika in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sentral Mitra Informatika and Multipolar Technology 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 Technology Tbk are associated (or correlated) with Sentral Mitra. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sentral Mitra Informatika has no effect on the direction of Multipolar Technology i.e., Multipolar Technology and Sentral Mitra go up and down completely randomly.

Pair Corralation between Multipolar Technology and Sentral Mitra

Assuming the 90 days trading horizon Multipolar Technology Tbk is expected to generate 2.36 times more return on investment than Sentral Mitra. However, Multipolar Technology is 2.36 times more volatile than Sentral Mitra Informatika. It trades about 0.43 of its potential returns per unit of risk. Sentral Mitra Informatika is currently generating about -0.03 per unit of risk. If you would invest  173,000  in Multipolar Technology Tbk on September 3, 2024 and sell it today you would earn a total of  1,967,000  from holding Multipolar Technology Tbk or generate 1136.99% return on investment over 90 days.

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

Multipolar Technology Tbk  vs.  Sentral Mitra Informatika

Multipolar Technology Tbk

Risk-Adjusted Performance

34 of 100

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Multipolar Technology Tbk are ranked lower than 34 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Multipolar Technology disclosed solid returns over the last few months and may actually be approaching a breakup point.

Sentral Mitra Informatika

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sentral Mitra Informatika 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.

Pair Trading with Multipolar Technology and Sentral Mitra

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

The idea behind Multipolar Technology Tbk and Sentral Mitra Informatika 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.