Correlation Between Multi Bintang and Sekar Laut
Can any of the company-specific risk be diversified away by investing in both Multi Bintang and Sekar Laut 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 Bintang and Sekar Laut into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Multi Bintang Indonesia and Sekar Laut Tbk, you can compare the effects of market volatilities on Multi Bintang and Sekar Laut 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 Bintang with a short position of Sekar Laut. Check out your portfolio center. Please also check ongoing floating volatility patterns of Multi Bintang and Sekar Laut.
Diversification Opportunities for Multi Bintang and Sekar Laut
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Multi and Sekar is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Multi Bintang Indonesia and Sekar Laut Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sekar Laut Tbk and Multi Bintang 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 Bintang Indonesia are associated (or correlated) with Sekar Laut. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sekar Laut Tbk has no effect on the direction of Multi Bintang i.e., Multi Bintang and Sekar Laut go up and down completely randomly.
Pair Corralation between Multi Bintang and Sekar Laut
Assuming the 90 days trading horizon Multi Bintang Indonesia is expected to under-perform the Sekar Laut. But the stock apears to be less risky and, when comparing its historical volatility, Multi Bintang Indonesia is 52.65 times less risky than Sekar Laut. The stock trades about -0.05 of its potential returns per unit of risk. The Sekar Laut Tbk is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 18,223 in Sekar Laut Tbk on September 2, 2024 and sell it today you would earn a total of 1,277 from holding Sekar Laut Tbk or generate 7.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Multi Bintang Indonesia vs. Sekar Laut Tbk
Performance |
| Timeline |
| Multi Bintang Indonesia |
| Sekar Laut Tbk |
Multi Bintang and Sekar Laut Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Multi Bintang and Sekar Laut
The main advantage of trading using opposite Multi Bintang and Sekar Laut positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Multi Bintang position performs unexpectedly, Sekar Laut 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 Sekar Laut will offset losses from the drop in Sekar Laut's long position.| Multi Bintang vs. Bank BRISyariah Tbk | Multi Bintang vs. Mitra Pinasthika Mustika | Multi Bintang vs. Jakarta Int Hotels | Multi Bintang vs. Indosterling Technomedia Tbk |
| Sekar Laut vs. Siantar Top Tbk | Sekar Laut vs. Prasidha Aneka Niaga | Sekar Laut vs. Mandom Indonesia Tbk | Sekar Laut 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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