Correlation Between Asia Pacific and Multi Medika

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

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

Diversification Opportunities for Asia Pacific and Multi Medika

0.6

Correlation Coefficient

Asia Pacific  Multi Medika

Poor diversification

The 3 months correlation between Asia and Multi is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Asia Pacific Investama and Multi Medika Internasional in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Multi Medika Interna and Asia Pacific 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 Asia Pacific Investama are associated (or correlated) with Multi Medika. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Multi Medika Interna has no effect on the direction of Asia Pacific i.e., Asia Pacific and Multi Medika go up and down completely randomly.

Pair Corralation between Asia Pacific and Multi Medika

Assuming the 90 days trading horizon Asia Pacific Investama is expected to under-perform the Multi Medika. But the stock apears to be less risky and, when comparing its historical volatility, Asia Pacific Investama is 1.32 times less risky than Multi Medika. The stock trades about -0.11 of its potential returns per unit of risk. The Multi Medika Internasional is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  7,100  in Multi Medika Internasional on September 5, 2024 and sell it today you would earn a total of  400.00  from holding Multi Medika Internasional or generate 5.63% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.45%
Values	Daily Returns

Asia Pacific Investama  vs.  Multi Medika Internasional

Asia Pacific Investama

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Asia Pacific Investama are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Asia Pacific may actually be approaching a critical reversion point that can send shares even higher in January 2025.

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.

Pair Trading with Asia Pacific and Multi Medika

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

The idea behind Asia Pacific Investama and Multi Medika Internasional 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.

Check out your portfolio center.

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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.