Correlation Between Gozco Plantations and Multi Medika
Can any of the company-specific risk be diversified away by investing in both Gozco Plantations 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 Gozco Plantations and Multi Medika into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gozco Plantations Tbk and Multi Medika Internasional, you can compare the effects of market volatilities on Gozco Plantations 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 Gozco Plantations with a short position of Multi Medika. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gozco Plantations and Multi Medika.
Diversification Opportunities for Gozco Plantations and Multi Medika
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Gozco and Multi is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Gozco Plantations 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 Gozco Plantations 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 Gozco Plantations 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 Gozco Plantations i.e., Gozco Plantations and Multi Medika go up and down completely randomly.
Pair Corralation between Gozco Plantations and Multi Medika
Assuming the 90 days trading horizon Gozco Plantations is expected to generate 4.68 times less return on investment than Multi Medika. But when comparing it to its historical volatility, Gozco Plantations Tbk is 1.84 times less risky than Multi Medika. It trades about 0.03 of its potential returns per unit of risk. 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 3, 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 | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gozco Plantations Tbk vs. Multi Medika Internasional
Performance |
| Timeline |
| Gozco Plantations Tbk |
| Multi Medika Interna |
Gozco Plantations and Multi Medika Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gozco Plantations and Multi Medika
The main advantage of trading using opposite Gozco Plantations and Multi Medika positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gozco Plantations 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.| Gozco Plantations vs. Sampoerna Agro Tbk | Gozco Plantations vs. Tunas Baru Lampung | Gozco Plantations vs. Bakrie Sumatera Plantations | Gozco Plantations vs. Bisi International Tbk |
| Multi Medika vs. Indo Acidatama Tbk | Multi Medika vs. PT Boston Furniture | Multi Medika vs. Global Mediacom Tbk | Multi Medika vs. First Media Tbk |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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