Correlation Between Multi Medika and Hensel Davest

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

By analyzing existing cross correlation between Multi Medika Internasional and Hensel Davest Indonesia, you can compare the effects of market volatilities on Multi Medika and Hensel Davest 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 Medika with a short position of Hensel Davest. Check out your portfolio center. Please also check ongoing floating volatility patterns of Multi Medika and Hensel Davest.

Diversification Opportunities for Multi Medika and Hensel Davest

0.83

Correlation Coefficient

Multi Medika  Hensel Davest

Very poor diversification

The 3 months correlation between Multi and Hensel is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Multi Medika Internasional and Hensel Davest Indonesia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hensel Davest Indonesia and Multi Medika 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 Medika Internasional are associated (or correlated) with Hensel Davest. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hensel Davest Indonesia has no effect on the direction of Multi Medika i.e., Multi Medika and Hensel Davest go up and down completely randomly.

Pair Corralation between Multi Medika and Hensel Davest

Assuming the 90 days trading horizon Multi Medika Internasional is expected to generate 1.8 times more return on investment than Hensel Davest. However, Multi Medika is 1.8 times more volatile than Hensel Davest Indonesia. It trades about 0.13 of its potential returns per unit of risk. Hensel Davest Indonesia is currently generating about 0.14 per unit of risk. If you would invest  7,700  in Multi Medika Internasional on December 1, 2024 and sell it today you would earn a total of  5,700  from holding Multi Medika Internasional or generate 74.03% return on investment over 90 days.

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

Multi Medika Internasional  vs.  Hensel Davest Indonesia

Multi Medika Interna

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Multi Medika Internasional are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Multi Medika disclosed solid returns over the last few months and may actually be approaching a breakup point.

Hensel Davest Indonesia

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Hensel Davest Indonesia are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Hensel Davest disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Multi Medika and Hensel Davest

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

The idea behind Multi Medika Internasional and Hensel Davest Indonesia 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .