Correlation Between Wir Asia and Multipolar Technology

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

By analyzing existing cross correlation between Wir Asia Tbk and Multipolar Technology Tbk, you can compare the effects of market volatilities on Wir Asia and Multipolar Technology 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 Wir Asia with a short position of Multipolar Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wir Asia and Multipolar Technology.

Diversification Opportunities for Wir Asia and Multipolar Technology

0.28

Correlation Coefficient

Wir Asia  Multipolar Technology

Modest diversification

The 3 months correlation between Wir and Multipolar is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Wir Asia Tbk and Multipolar Technology Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Multipolar Technology Tbk and Wir Asia 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 Wir Asia Tbk are associated (or correlated) with Multipolar Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Multipolar Technology Tbk has no effect on the direction of Wir Asia i.e., Wir Asia and Multipolar Technology go up and down completely randomly.

Pair Corralation between Wir Asia and Multipolar Technology

Assuming the 90 days trading horizon Wir Asia is expected to generate 17.01 times less return on investment than Multipolar Technology. But when comparing it to its historical volatility, Wir Asia Tbk is 2.16 times less risky than Multipolar Technology. It trades about 0.04 of its potential returns per unit of risk. Multipolar Technology Tbk is currently generating about 0.31 of returns per unit of risk over similar time horizon. If you would invest  433,000  in Multipolar Technology Tbk on September 13, 2024 and sell it today you would earn a total of  1,622,000  from holding Multipolar Technology Tbk or generate 374.6% return on investment over 90 days.

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

Wir Asia Tbk  vs.  Multipolar Technology Tbk

Wir Asia Tbk

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Wir Asia Tbk are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Wir Asia may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Multipolar Technology Tbk

Risk-Adjusted Performance

24 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Multipolar Technology Tbk are ranked lower than 24 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Multipolar Technology disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Wir Asia and Multipolar Technology

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

The idea behind Wir Asia Tbk and Multipolar Technology 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.