Correlation Between Gudang Garam and Multi Medika
Can any of the company-specific risk be diversified away by investing in both Gudang Garam 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 Gudang Garam and Multi Medika into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gudang Garam Tbk and Multi Medika Internasional, you can compare the effects of market volatilities on Gudang Garam 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 Gudang Garam with a short position of Multi Medika. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gudang Garam and Multi Medika.
Diversification Opportunities for Gudang Garam and Multi Medika
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Gudang and Multi is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Gudang Garam 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 Gudang Garam 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 Gudang Garam 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 Gudang Garam i.e., Gudang Garam and Multi Medika go up and down completely randomly.
Pair Corralation between Gudang Garam and Multi Medika
Assuming the 90 days trading horizon Gudang Garam Tbk is expected to under-perform the Multi Medika. But the stock apears to be less risky and, when comparing its historical volatility, Gudang Garam Tbk is 3.35 times less risky than Multi Medika. The stock trades about -0.49 of its potential returns per unit of risk. The Multi Medika Internasional is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 7,700 in Multi Medika Internasional on August 27, 2024 and sell it today you would earn a total of 500.00 from holding Multi Medika Internasional or generate 6.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gudang Garam Tbk vs. Multi Medika Internasional
Performance |
| Timeline |
| Gudang Garam Tbk |
| Multi Medika Interna |
Gudang Garam and Multi Medika Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gudang Garam and Multi Medika
The main advantage of trading using opposite Gudang Garam and Multi Medika positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gudang Garam 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 Gudang Garam 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.| Multi Medika vs. Bakrie Brothers Tbk | Multi Medika vs. Langgeng Makmur Industri | Multi Medika vs. Petrosea Tbk | Multi Medika vs. Graha Layar Prima |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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