Correlation Between Multi Prima and Prima Alloy

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Can any of the company-specific risk be diversified away by investing in both Multi Prima and Prima Alloy 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 Prima and Prima Alloy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Multi Prima Sejahtera and Prima Alloy Steel, you can compare the effects of market volatilities on Multi Prima and Prima Alloy 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 Prima with a short position of Prima Alloy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Multi Prima and Prima Alloy.

Diversification Opportunities for Multi Prima and Prima Alloy

MultiPrimaDiversified AwayMultiPrimaDiversified Away100%
0.0
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Multi and Prima is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Multi Prima Sejahtera and Prima Alloy Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prima Alloy Steel and Multi Prima 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 Prima Sejahtera are associated (or correlated) with Prima Alloy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prima Alloy Steel has no effect on the direction of Multi Prima i.e., Multi Prima and Prima Alloy go up and down completely randomly.

Pair Corralation between Multi Prima and Prima Alloy

If you would invest  36,800  in Multi Prima Sejahtera on September 13, 2024 and sell it today you would earn a total of  3,000  from holding Multi Prima Sejahtera or generate 8.15% return on investment over 90 days.
Time Period3 Months [change]
DirectionFlat 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Multi Prima Sejahtera  vs.  Prima Alloy Steel

 Performance 
JavaScript chart by amCharts 3.21.15OctNov 051015
JavaScript chart by amCharts 3.21.15LPIN PRAS
       Timeline  
Multi Prima Sejahtera 

Risk-Adjusted Performance

6 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Multi Prima Sejahtera are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Multi Prima may actually be approaching a critical reversion point that can send shares even higher in January 2025.
JavaScript chart by amCharts 3.21.15OctNovDecNovDec360380400420440
Prima Alloy Steel 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Prima Alloy Steel has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Prima Alloy is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.
JavaScript chart by amCharts 3.21.15OctNovDecNovDec9797.5

Multi Prima and Prima Alloy Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-5.21-3.93-2.65-1.37-0.08691.252.583.925.266.59 0.020.040.060.080.100.120.14
JavaScript chart by amCharts 3.21.15LPIN PRAS
       Returns  

Pair Trading with Multi Prima and Prima Alloy

The main advantage of trading using opposite Multi Prima and Prima Alloy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Multi Prima position performs unexpectedly, Prima Alloy 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 Prima Alloy will offset losses from the drop in Prima Alloy's long position.
The idea behind Multi Prima Sejahtera and Prima Alloy Steel 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 CEOs Directory module to screen CEOs from public companies around the world.

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