Correlation Between Kokoh Inti and Multifiling Mitra
Can any of the company-specific risk be diversified away by investing in both Kokoh Inti and Multifiling Mitra 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 Kokoh Inti and Multifiling Mitra into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kokoh Inti Arebama and Multifiling Mitra Indonesia, you can compare the effects of market volatilities on Kokoh Inti and Multifiling Mitra 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 Kokoh Inti with a short position of Multifiling Mitra. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kokoh Inti and Multifiling Mitra.
Diversification Opportunities for Kokoh Inti and Multifiling Mitra
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Kokoh and Multifiling is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Kokoh Inti Arebama and Multifiling Mitra Indonesia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Multifiling Mitra and Kokoh Inti 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 Kokoh Inti Arebama are associated (or correlated) with Multifiling Mitra. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Multifiling Mitra has no effect on the direction of Kokoh Inti i.e., Kokoh Inti and Multifiling Mitra go up and down completely randomly.
Pair Corralation between Kokoh Inti and Multifiling Mitra
Assuming the 90 days trading horizon Kokoh Inti Arebama is expected to under-perform the Multifiling Mitra. In addition to that, Kokoh Inti is 1.02 times more volatile than Multifiling Mitra Indonesia. It trades about -0.02 of its total potential returns per unit of risk. Multifiling Mitra Indonesia is currently generating about 0.07 per unit of volatility. If you would invest 70,262 in Multifiling Mitra Indonesia on August 29, 2024 and sell it today you would earn a total of 54,738 from holding Multifiling Mitra Indonesia or generate 77.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.73% |
| Values | Daily Returns |
Kokoh Inti Arebama vs. Multifiling Mitra Indonesia
Performance |
| Timeline |
| Kokoh Inti Arebama |
| Multifiling Mitra |
Kokoh Inti and Multifiling Mitra Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kokoh Inti and Multifiling Mitra
The main advantage of trading using opposite Kokoh Inti and Multifiling Mitra positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kokoh Inti position performs unexpectedly, Multifiling Mitra 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 Multifiling Mitra will offset losses from the drop in Multifiling Mitra's long position.The idea behind Kokoh Inti Arebama and Multifiling Mitra Indonesia 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.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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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