Correlation Between Alumindo Light and Multi Medika
Can any of the company-specific risk be diversified away by investing in both Alumindo Light 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 Alumindo Light and Multi Medika into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alumindo Light Metal and Multi Medika Internasional, you can compare the effects of market volatilities on Alumindo Light 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 Alumindo Light with a short position of Multi Medika. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alumindo Light and Multi Medika.
Diversification Opportunities for Alumindo Light and Multi Medika
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Alumindo and Multi is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Alumindo Light Metal 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 Alumindo Light 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 Alumindo Light Metal 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 Alumindo Light i.e., Alumindo Light and Multi Medika go up and down completely randomly.
Pair Corralation between Alumindo Light and Multi Medika
Assuming the 90 days trading horizon Alumindo Light is expected to generate 1.5 times less return on investment than Multi Medika. But when comparing it to its historical volatility, Alumindo Light Metal is 1.23 times less risky than Multi Medika. It trades about 0.07 of its potential returns per unit of risk. Multi Medika Internasional is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 5,000 in Multi Medika Internasional on September 2, 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 Against |
| Strength | Insignificant |
| Accuracy | 99.21% |
| Values | Daily Returns |
Alumindo Light Metal vs. Multi Medika Internasional
Performance |
| Timeline |
| Alumindo Light Metal |
| Multi Medika Interna |
Alumindo Light and Multi Medika Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alumindo Light and Multi Medika
The main advantage of trading using opposite Alumindo Light and Multi Medika positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alumindo Light 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.| Alumindo Light vs. Perusahaan Gas Negara | Alumindo Light vs. Telkom Indonesia Tbk | Alumindo Light vs. Mitra Pinasthika Mustika | Alumindo Light vs. Jakarta Int Hotels |
| Multi Medika vs. Gozco Plantations Tbk | Multi Medika vs. Integra Indocabinet Tbk | Multi Medika vs. J Resources Asia | Multi Medika vs. Bhuwanatala Indah Permai |
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 CEOs Directory module to screen CEOs from public companies around the world.
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