Correlation Between Multi Indocitra and Langgeng Makmur
Can any of the company-specific risk be diversified away by investing in both Multi Indocitra and Langgeng Makmur 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 Multi Indocitra and Langgeng Makmur into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Multi Indocitra Tbk and Langgeng Makmur Industri, you can compare the effects of market volatilities on Multi Indocitra and Langgeng Makmur 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 Multi Indocitra with a short position of Langgeng Makmur. Check out your portfolio center. Please also check ongoing floating volatility patterns of Multi Indocitra and Langgeng Makmur.
Diversification Opportunities for Multi Indocitra and Langgeng Makmur
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between Multi and Langgeng is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Multi Indocitra Tbk and Langgeng Makmur Industri in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Langgeng Makmur Industri and Multi Indocitra 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 Multi Indocitra Tbk are associated (or correlated) with Langgeng Makmur. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Langgeng Makmur Industri has no effect on the direction of Multi Indocitra i.e., Multi Indocitra and Langgeng Makmur go up and down completely randomly.
Pair Corralation between Multi Indocitra and Langgeng Makmur
Assuming the 90 days trading horizon Multi Indocitra Tbk is expected to under-perform the Langgeng Makmur. But the stock apears to be less risky and, when comparing its historical volatility, Multi Indocitra Tbk is 6.64 times less risky than Langgeng Makmur. The stock trades about -0.01 of its potential returns per unit of risk. The Langgeng Makmur Industri is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 8,000 in Langgeng Makmur Industri on September 3, 2024 and sell it today you would earn a total of 5,800 from holding Langgeng Makmur Industri or generate 72.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Multi Indocitra Tbk vs. Langgeng Makmur Industri
Performance |
| Timeline |
| Multi Indocitra Tbk |
| Langgeng Makmur Industri |
Multi Indocitra and Langgeng Makmur Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Multi Indocitra and Langgeng Makmur
The main advantage of trading using opposite Multi Indocitra and Langgeng Makmur positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Multi Indocitra position performs unexpectedly, Langgeng Makmur 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 Langgeng Makmur will offset losses from the drop in Langgeng Makmur's long position.| Multi Indocitra vs. Mitra Pinasthika Mustika | Multi Indocitra vs. Jakarta Int Hotels | Multi Indocitra vs. Asuransi Harta Aman | Multi Indocitra vs. Indosterling Technomedia Tbk |
| Langgeng Makmur vs. Kedaung Indah Can | Langgeng Makmur vs. Kedawung Setia Industrial | Langgeng Makmur vs. Mustika Ratu Tbk | Langgeng Makmur vs. Pyridam Farma 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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