Correlation Between PT Indofood and Multi Medika
Can any of the company-specific risk be diversified away by investing in both PT Indofood 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 PT Indofood and Multi Medika into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PT Indofood Sukses and Multi Medika Internasional, you can compare the effects of market volatilities on PT Indofood 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 PT Indofood with a short position of Multi Medika. Check out your portfolio center. Please also check ongoing floating volatility patterns of PT Indofood and Multi Medika.
Diversification Opportunities for PT Indofood and Multi Medika
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between INDF and Multi is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding PT Indofood Sukses 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 PT Indofood 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 PT Indofood Sukses 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 PT Indofood i.e., PT Indofood and Multi Medika go up and down completely randomly.
Pair Corralation between PT Indofood and Multi Medika
Assuming the 90 days trading horizon PT Indofood Sukses is expected to generate 0.19 times more return on investment than Multi Medika. However, PT Indofood Sukses is 5.31 times less risky than Multi Medika. It trades about -0.21 of its potential returns per unit of risk. Multi Medika Internasional is currently generating about -0.09 per unit of risk. If you would invest 785,000 in PT Indofood Sukses on December 2, 2024 and sell it today you would lose (77,500) from holding PT Indofood Sukses or give up 9.87% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
PT Indofood Sukses vs. Multi Medika Internasional
Performance |
| Timeline |
| PT Indofood Sukses |
| Multi Medika Interna |
PT Indofood and Multi Medika Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PT Indofood and Multi Medika
The main advantage of trading using opposite PT Indofood and Multi Medika positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PT Indofood 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.| PT Indofood vs. Astra International Tbk | ||
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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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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