Correlation Between Tira Austenite and Multi Medika

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

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

Diversification Opportunities for Tira Austenite and Multi Medika

0.48

Correlation Coefficient

Tira Austenite  Multi Medika

Very weak diversification

The 3 months correlation between Tira and Multi is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Tira Austenite Tbk 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 Tira Austenite 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 Tira Austenite Tbk 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 Tira Austenite i.e., Tira Austenite and Multi Medika go up and down completely randomly.

Pair Corralation between Tira Austenite and Multi Medika

Assuming the 90 days trading horizon Tira Austenite is expected to generate 1.37 times less return on investment than Multi Medika. In addition to that, Tira Austenite is 1.2 times more volatile than Multi Medika Internasional. It trades about 0.05 of its total potential returns per unit of risk. Multi Medika Internasional is currently generating about 0.09 per unit of volatility. If you would invest  5,000  in Multi Medika Internasional on September 1, 2024 and sell it today you would earn a total of  2,500  from holding Multi Medika Internasional or generate 50.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	99.21%
Values	Daily Returns

Tira Austenite Tbk  vs.  Multi Medika Internasional

Tira Austenite Tbk

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Tira Austenite Tbk are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Tira Austenite disclosed solid returns over the last few months and may actually be approaching a breakup point.

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 Tira Austenite and Multi Medika

The main advantage of trading using opposite Tira Austenite and Multi Medika positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tira Austenite 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 Tira Austenite Tbk 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.

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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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.