Correlation Between Multi Medika and PT MNC

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

Diversification Opportunities for Multi Medika and PT MNC

-0.06

Correlation Coefficient

Multi Medika  PT MNC

Good diversification

The 3 months correlation between Multi and IATA is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Multi Medika Internasional and PT MNC Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PT MNC Energy 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 PT MNC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PT MNC Energy has no effect on the direction of Multi Medika i.e., Multi Medika and PT MNC go up and down completely randomly.

Pair Corralation between Multi Medika and PT MNC

Assuming the 90 days trading horizon Multi Medika Internasional is expected to under-perform the PT MNC. In addition to that, Multi Medika is 3.95 times more volatile than PT MNC Energy. It trades about 0.0 of its total potential returns per unit of risk. PT MNC Energy is currently generating about 0.0 per unit of volatility. If you would invest  5,000  in PT MNC Energy on December 29, 2024 and sell it today you would lose (100.00) from holding PT MNC Energy or give up 2.0% of portfolio value over 90 days.

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

Multi Medika Internasional  vs.  PT MNC Energy

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.

PT MNC Energy

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Multi Medika and PT MNC

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

The idea behind Multi Medika Internasional and PT MNC Energy 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.