Correlation Between Bank Pan and Multi Medika
Can any of the company-specific risk be diversified away by investing in both Bank Pan and Multi Medika 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 Bank Pan and Multi Medika into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bank Pan Indonesia and Multi Medika Internasional, you can compare the effects of market volatilities on Bank Pan and Multi Medika 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 Bank Pan with a short position of Multi Medika. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank Pan and Multi Medika.
Diversification Opportunities for Bank Pan and Multi Medika
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Bank and Multi is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Bank Pan Indonesia and Multi Medika Internasional in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Multi Medika Interna and Bank Pan 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 Bank Pan Indonesia are associated (or correlated) with Multi Medika. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Multi Medika Interna has no effect on the direction of Bank Pan i.e., Bank Pan and Multi Medika go up and down completely randomly.
Pair Corralation between Bank Pan and Multi Medika
Assuming the 90 days trading horizon Bank Pan is expected to generate 1.33 times less return on investment than Multi Medika. But when comparing it to its historical volatility, Bank Pan Indonesia is 1.77 times less risky than Multi Medika. It trades about 0.13 of its potential returns per unit of risk. Multi Medika Internasional is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 5,000 in Multi Medika Internasional on August 30, 2024 and sell it today you would earn a total of 2,900 from holding Multi Medika Internasional or generate 58.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank Pan Indonesia vs. Multi Medika Internasional
Performance |
| Timeline |
| Bank Pan Indonesia |
| Multi Medika Interna |
Bank Pan and Multi Medika Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank Pan and Multi Medika
The main advantage of trading using opposite Bank Pan and Multi Medika positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank Pan position performs unexpectedly, Multi Medika 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 Multi Medika will offset losses from the drop in Multi Medika's long position.| Bank Pan vs. Bank Danamon Indonesia | Bank Pan vs. Bank Cimb Niaga | Bank Pan vs. Panin Financial Tbk | Bank Pan vs. Bank Maybank Indonesia |
| Multi Medika vs. Merdeka Copper Gold | Multi Medika vs. First Media Tbk | Multi Medika vs. Alumindo Light Metal | Multi Medika vs. Era Media Sejahtera |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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