Correlation Between PT Multi and Catur Sentosa

Can any of the company-specific risk be diversified away by investing in both PT Multi and Catur Sentosa 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 PT Multi and Catur Sentosa into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between PT Multi Garam and Catur Sentosa Adiprana, you can compare the effects of market volatilities on PT Multi and Catur Sentosa 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 PT Multi with a short position of Catur Sentosa. Check out your portfolio center. Please also check ongoing floating volatility patterns of PT Multi and Catur Sentosa.

Diversification Opportunities for PT Multi and Catur Sentosa

0.03

Correlation Coefficient

PT Multi  Catur Sentosa

Significant diversification

The 3 months correlation between FOLK and Catur is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding PT Multi Garam and Catur Sentosa Adiprana in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Catur Sentosa Adiprana and PT Multi 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 PT Multi Garam are associated (or correlated) with Catur Sentosa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Catur Sentosa Adiprana has no effect on the direction of PT Multi i.e., PT Multi and Catur Sentosa go up and down completely randomly.

Pair Corralation between PT Multi and Catur Sentosa

Assuming the 90 days trading horizon PT Multi Garam is expected to generate 2.0 times more return on investment than Catur Sentosa. However, PT Multi is 2.0 times more volatile than Catur Sentosa Adiprana. It trades about 0.01 of its potential returns per unit of risk. Catur Sentosa Adiprana is currently generating about -0.03 per unit of risk. If you would invest  5,300  in PT Multi Garam on September 13, 2024 and sell it today you would lose (300.00) from holding PT Multi Garam or give up 5.66% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

PT Multi Garam  vs.  Catur Sentosa Adiprana

PT Multi Garam

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PT Multi Garam has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, PT Multi is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Catur Sentosa Adiprana

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Catur Sentosa Adiprana has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Catur Sentosa is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with PT Multi and Catur Sentosa

The main advantage of trading using opposite PT Multi and Catur Sentosa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PT Multi position performs unexpectedly, Catur Sentosa 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 Catur Sentosa will offset losses from the drop in Catur Sentosa's long position.

The idea behind PT Multi Garam and Catur Sentosa Adiprana 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.

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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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.