Correlation Between Gunung Raja and Multipolar Technology

Can any of the company-specific risk be diversified away by investing in both Gunung Raja 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 Gunung Raja and Multipolar Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Gunung Raja Paksi and Multipolar Technology Tbk, you can compare the effects of market volatilities on Gunung Raja 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 Gunung Raja with a short position of Multipolar Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gunung Raja and Multipolar Technology.

Diversification Opportunities for Gunung Raja and Multipolar Technology

-0.27

Correlation Coefficient

Gunung Raja  Multipolar Technology

Very good diversification

The 3 months correlation between Gunung and Multipolar is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Gunung Raja Paksi 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 Gunung Raja 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 Gunung Raja Paksi 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 Gunung Raja i.e., Gunung Raja and Multipolar Technology go up and down completely randomly.

Pair Corralation between Gunung Raja and Multipolar Technology

Assuming the 90 days trading horizon Gunung Raja is expected to generate 8.8 times less return on investment than Multipolar Technology. In addition to that, Gunung Raja is 1.5 times more volatile than Multipolar Technology Tbk. It trades about 0.02 of its total potential returns per unit of risk. Multipolar Technology Tbk is currently generating about 0.31 per unit of volatility. If you would invest  433,000  in Multipolar Technology Tbk on September 15, 2024 and sell it today you would earn a total of  1,617,000  from holding Multipolar Technology Tbk or generate 373.44% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Gunung Raja Paksi  vs.  Multipolar Technology Tbk

Gunung Raja Paksi

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Gunung Raja Paksi are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Gunung Raja disclosed solid returns over the last few months and may actually be approaching a breakup point.

Multipolar Technology Tbk

Risk-Adjusted Performance

24 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Multipolar Technology Tbk are ranked lower than 24 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Multipolar Technology disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Gunung Raja and Multipolar Technology

The main advantage of trading using opposite Gunung Raja and Multipolar Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gunung Raja 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 Gunung Raja Paksi 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.

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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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.