Correlation Between Multi Medika and Lion Metal
Can any of the company-specific risk be diversified away by investing in both Multi Medika and Lion Metal 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 Medika and Lion Metal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Multi Medika Internasional and Lion Metal Works, you can compare the effects of market volatilities on Multi Medika and Lion Metal 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 Medika with a short position of Lion Metal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Multi Medika and Lion Metal.
Diversification Opportunities for Multi Medika and Lion Metal
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Multi and Lion is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Multi Medika Internasional and Lion Metal Works in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lion Metal Works and Multi Medika 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 Medika Internasional are associated (or correlated) with Lion Metal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lion Metal Works has no effect on the direction of Multi Medika i.e., Multi Medika and Lion Metal go up and down completely randomly.
Pair Corralation between Multi Medika and Lion Metal
Assuming the 90 days trading horizon Multi Medika Internasional is expected to generate 1.06 times more return on investment than Lion Metal. However, Multi Medika is 1.06 times more volatile than Lion Metal Works. It trades about 0.07 of its potential returns per unit of risk. Lion Metal Works is currently generating about -0.17 per unit of risk. If you would invest 7,100 in Multi Medika Internasional on August 31, 2024 and sell it today you would earn a total of 600.00 from holding Multi Medika Internasional or generate 8.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Multi Medika Internasional vs. Lion Metal Works
Performance |
| Timeline |
| Multi Medika Interna |
| Lion Metal Works |
Multi Medika and Lion Metal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Multi Medika and Lion Metal
The main advantage of trading using opposite Multi Medika and Lion Metal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Multi Medika position performs unexpectedly, Lion Metal 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 Lion Metal will offset losses from the drop in Lion Metal's long position.| Multi Medika vs. Multi Spunindo Jaya | Multi Medika vs. Multi Bintang Indonesia | Multi Medika vs. Multi Indocitra Tbk | Multi Medika vs. Multi Makmur Lemindo |
| Lion Metal vs. Matahari Department Store | Lion Metal vs. Multi Medika Internasional | Lion Metal vs. Visi Media Asia | Lion Metal vs. Bayan Resources 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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