Correlation Between Multi Medika and Samudera Indonesia

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

Diversification Opportunities for Multi Medika and Samudera Indonesia

-0.45

Correlation Coefficient

Multi Medika  Samudera Indonesia

Very good diversification

The 3 months correlation between Multi and Samudera is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Multi Medika Internasional and Samudera Indonesia Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Samudera Indonesia Tbk 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 Samudera Indonesia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Samudera Indonesia Tbk has no effect on the direction of Multi Medika i.e., Multi Medika and Samudera Indonesia go up and down completely randomly.

Pair Corralation between Multi Medika and Samudera Indonesia

Assuming the 90 days trading horizon Multi Medika Internasional is expected to generate 3.0 times more return on investment than Samudera Indonesia. However, Multi Medika is 3.0 times more volatile than Samudera Indonesia Tbk. It trades about 0.07 of its potential returns per unit of risk. Samudera Indonesia Tbk is currently generating about -0.24 per unit of risk. If you would invest  6,400  in Multi Medika Internasional on September 2, 2024 and sell it today you would earn a total of  1,100  from holding Multi Medika Internasional or generate 17.19% return on investment over 90 days.

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

Multi Medika Internasional  vs.  Samudera Indonesia Tbk

Multi Medika Interna

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Multi Medika Internasional are ranked lower than 5 (%) 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.

Samudera Indonesia Tbk

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Samudera Indonesia Tbk has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's forward-looking signals remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Multi Medika and Samudera Indonesia

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

The idea behind Multi Medika Internasional and Samudera Indonesia Tbk 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.