Correlation Between Multistrada Arah and Indospring Tbk

Can any of the company-specific risk be diversified away by investing in both Multistrada Arah and Indospring Tbk 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 Multistrada Arah and Indospring Tbk into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Multistrada Arah Sarana and Indospring Tbk, you can compare the effects of market volatilities on Multistrada Arah and Indospring Tbk 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 Multistrada Arah with a short position of Indospring Tbk. Check out your portfolio center. Please also check ongoing floating volatility patterns of Multistrada Arah and Indospring Tbk.

Diversification Opportunities for Multistrada Arah and Indospring Tbk

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Correlation Coefficient

Multistrada Arah  Indospring Tbk

Pay attention - limited upside

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

Pair Corralation between Multistrada Arah and Indospring Tbk

If you would invest  620,000  in Multistrada Arah Sarana on September 15, 2024 and sell it today you would earn a total of  0.00  from holding Multistrada Arah Sarana or generate 0.0% return on investment over 90 days.

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

Multistrada Arah Sarana  vs.  Indospring Tbk

Multistrada Arah Sarana

Risk-Adjusted Performance

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Very Weak

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

Indospring Tbk

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Indospring Tbk has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's forward-looking signals remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Multistrada Arah and Indospring Tbk

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

The idea behind Multistrada Arah Sarana and Indospring 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.