Correlation Between Multi Medika and Transcoal Pacific
Can any of the company-specific risk be diversified away by investing in both Multi Medika and Transcoal Pacific 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 Transcoal Pacific 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 Transcoal Pacific Tbk, you can compare the effects of market volatilities on Multi Medika and Transcoal Pacific 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 Transcoal Pacific. Check out your portfolio center. Please also check ongoing floating volatility patterns of Multi Medika and Transcoal Pacific.
Diversification Opportunities for Multi Medika and Transcoal Pacific
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Multi and Transcoal is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Multi Medika Internasional and Transcoal Pacific Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transcoal Pacific Tbk 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 Transcoal Pacific. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transcoal Pacific Tbk has no effect on the direction of Multi Medika i.e., Multi Medika and Transcoal Pacific go up and down completely randomly.
Pair Corralation between Multi Medika and Transcoal Pacific
Assuming the 90 days trading horizon Multi Medika Internasional is expected to generate 3.04 times more return on investment than Transcoal Pacific. However, Multi Medika is 3.04 times more volatile than Transcoal Pacific Tbk. It trades about 0.07 of its potential returns per unit of risk. Transcoal Pacific Tbk is currently generating about 0.04 per unit of risk. If you would invest 6,400 in Multi Medika Internasional on September 2, 2024 and sell it today you would earn a total of 1,100 from holding Multi Medika Internasional or generate 17.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Multi Medika Internasional vs. Transcoal Pacific Tbk
Performance |
| Timeline |
| Multi Medika Interna |
| Transcoal Pacific Tbk |
Multi Medika and Transcoal Pacific Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Multi Medika and Transcoal Pacific
The main advantage of trading using opposite Multi Medika and Transcoal Pacific positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Multi Medika position performs unexpectedly, Transcoal Pacific 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 Transcoal Pacific will offset losses from the drop in Transcoal Pacific's long position.| Multi Medika vs. Gozco Plantations Tbk | Multi Medika vs. Integra Indocabinet Tbk | Multi Medika vs. J Resources Asia | Multi Medika vs. Bhuwanatala Indah Permai |
| Transcoal Pacific vs. Matahari Department Store | Transcoal Pacific vs. Multi Medika Internasional | Transcoal Pacific vs. Visi Media Asia | Transcoal Pacific 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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