Correlation Between Midi Utama and Multifiling Mitra
Can any of the company-specific risk be diversified away by investing in both Midi Utama 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 Midi Utama and Multifiling Mitra into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Midi Utama Indonesia and Multifiling Mitra Indonesia, you can compare the effects of market volatilities on Midi Utama 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 Midi Utama with a short position of Multifiling Mitra. Check out your portfolio center. Please also check ongoing floating volatility patterns of Midi Utama and Multifiling Mitra.
Diversification Opportunities for Midi Utama and Multifiling Mitra
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between Midi and Multifiling is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Midi Utama Indonesia and Multifiling Mitra Indonesia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Multifiling Mitra and Midi Utama 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 Midi Utama Indonesia 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 Midi Utama i.e., Midi Utama and Multifiling Mitra go up and down completely randomly.
Pair Corralation between Midi Utama and Multifiling Mitra
Assuming the 90 days trading horizon Midi Utama is expected to generate 1.8 times less return on investment than Multifiling Mitra. But when comparing it to its historical volatility, Midi Utama Indonesia is 1.14 times less risky than Multifiling Mitra. It trades about 0.04 of its potential returns per unit of risk. Multifiling Mitra Indonesia is currently generating about 0.07 of returns per unit of risk over similar time horizon. 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 | Insignificant |
| Accuracy | 99.73% |
| Values | Daily Returns |
Midi Utama Indonesia vs. Multifiling Mitra Indonesia
Performance |
| Timeline |
| Midi Utama Indonesia |
| Multifiling Mitra |
Midi Utama and Multifiling Mitra Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Midi Utama and Multifiling Mitra
The main advantage of trading using opposite Midi Utama and Multifiling Mitra positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Midi Utama 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 Midi Utama Indonesia 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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