Correlation Between Multi Makmur and Bank Rakyat
Can any of the company-specific risk be diversified away by investing in both Multi Makmur and Bank Rakyat 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 Makmur and Bank Rakyat into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Multi Makmur Lemindo and Bank Rakyat Indonesia, you can compare the effects of market volatilities on Multi Makmur and Bank Rakyat 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 Makmur with a short position of Bank Rakyat. Check out your portfolio center. Please also check ongoing floating volatility patterns of Multi Makmur and Bank Rakyat.
Diversification Opportunities for Multi Makmur and Bank Rakyat
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Multi and Bank is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Multi Makmur Lemindo and Bank Rakyat Indonesia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank Rakyat Indonesia and Multi Makmur 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 Makmur Lemindo are associated (or correlated) with Bank Rakyat. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank Rakyat Indonesia has no effect on the direction of Multi Makmur i.e., Multi Makmur and Bank Rakyat go up and down completely randomly.
Pair Corralation between Multi Makmur and Bank Rakyat
Assuming the 90 days trading horizon Multi Makmur Lemindo is expected to under-perform the Bank Rakyat. In addition to that, Multi Makmur is 3.14 times more volatile than Bank Rakyat Indonesia. It trades about -0.1 of its total potential returns per unit of risk. Bank Rakyat Indonesia is currently generating about -0.03 per unit of volatility. If you would invest 517,285 in Bank Rakyat Indonesia on August 31, 2024 and sell it today you would lose (82,285) from holding Bank Rakyat Indonesia or give up 15.91% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Multi Makmur Lemindo vs. Bank Rakyat Indonesia
Performance |
| Timeline |
| Multi Makmur Lemindo |
| Bank Rakyat Indonesia |
Multi Makmur and Bank Rakyat Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Multi Makmur and Bank Rakyat
The main advantage of trading using opposite Multi Makmur and Bank Rakyat positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Multi Makmur position performs unexpectedly, Bank Rakyat 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 Bank Rakyat will offset losses from the drop in Bank Rakyat's long position.| Multi Makmur vs. Bank Central Asia | Multi Makmur vs. Bank Rakyat Indonesia | Multi Makmur vs. Bayan Resources Tbk | Multi Makmur vs. Bank Mandiri Persero |
| Bank Rakyat vs. Bank Central Asia | Bank Rakyat vs. Bank Mandiri Persero | Bank Rakyat vs. Bank Negara Indonesia | Bank Rakyat vs. Telkom Indonesia 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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