Correlation Between Matahari Putra and Multipolar Technology
Can any of the company-specific risk be diversified away by investing in both Matahari Putra and Multipolar Technology 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 Matahari Putra and Multipolar Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Matahari Putra Prima and Multipolar Technology Tbk, you can compare the effects of market volatilities on Matahari Putra and Multipolar Technology 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 Matahari Putra with a short position of Multipolar Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Matahari Putra and Multipolar Technology.
Diversification Opportunities for Matahari Putra and Multipolar Technology
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Matahari and Multipolar is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Matahari Putra Prima and Multipolar Technology Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Multipolar Technology Tbk and Matahari Putra 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 Matahari Putra Prima are associated (or correlated) with Multipolar Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Multipolar Technology Tbk has no effect on the direction of Matahari Putra i.e., Matahari Putra and Multipolar Technology go up and down completely randomly.
Pair Corralation between Matahari Putra and Multipolar Technology
Assuming the 90 days trading horizon Matahari Putra Prima is expected to under-perform the Multipolar Technology. But the stock apears to be less risky and, when comparing its historical volatility, Matahari Putra Prima is 1.12 times less risky than Multipolar Technology. The stock trades about -0.02 of its potential returns per unit of risk. The Multipolar Technology Tbk is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 164,674 in Multipolar Technology Tbk on August 27, 2024 and sell it today you would earn a total of 2,335,326 from holding Multipolar Technology Tbk or generate 1418.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.79% |
| Values | Daily Returns |
Matahari Putra Prima vs. Multipolar Technology Tbk
Performance |
| Timeline |
| Matahari Putra Prima |
| Multipolar Technology Tbk |
Matahari Putra and Multipolar Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Matahari Putra and Multipolar Technology
The main advantage of trading using opposite Matahari Putra and Multipolar Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Matahari Putra position performs unexpectedly, Multipolar Technology 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 Multipolar Technology will offset losses from the drop in Multipolar Technology's long position.The idea behind Matahari Putra Prima and Multipolar Technology Tbk 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.| Multipolar Technology vs. Multipolar Tbk | Multipolar Technology vs. Astra Graphia Tbk | Multipolar Technology vs. Matahari Putra Prima | Multipolar Technology vs. Ramayana Lestari Sentosa |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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