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

0.74

Correlation Coefficient

Multi Medika  Hensel Davest

Poor diversification

The 3 months correlation between Multi and Hensel is 0.74. 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 under-perform the Hensel Davest. In addition to that, Multi Medika is 1.61 times more volatile than Hensel Davest Indonesia. It trades about 0.0 of its total potential returns per unit of risk. Hensel Davest Indonesia is currently generating about 0.04 per unit of volatility. If you would invest  1,900  in Hensel Davest Indonesia on December 30, 2024 and sell it today you would earn a total of  100.00  from holding Hensel Davest Indonesia or generate 5.26% return on investment over 90 days.

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

Multi Medika Internasional  vs.  Hensel Davest Indonesia

Multi Medika Interna

Risk-Adjusted Performance

Very Weak

Over the last 90 days Multi Medika Internasional has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Multi Medika is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Hensel Davest Indonesia

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Hensel Davest Indonesia are ranked lower than 3 (%) 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.