Correlation Between Multipolar Technology and Wir Asia

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

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

Diversification Opportunities for Multipolar Technology and Wir Asia

0.28

Correlation Coefficient

Multipolar Technology  Wir Asia

Modest diversification

The 3 months correlation between Multipolar and Wir is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Multipolar Technology Tbk and Wir Asia Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wir Asia Tbk and Multipolar Technology 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 Multipolar Technology Tbk are associated (or correlated) with Wir Asia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wir Asia Tbk has no effect on the direction of Multipolar Technology i.e., Multipolar Technology and Wir Asia go up and down completely randomly.

Pair Corralation between Multipolar Technology and Wir Asia

Assuming the 90 days trading horizon Multipolar Technology Tbk is expected to generate 2.16 times more return on investment than Wir Asia. However, Multipolar Technology is 2.16 times more volatile than Wir Asia Tbk. It trades about 0.31 of its potential returns per unit of risk. Wir Asia Tbk is currently generating about 0.04 per unit of risk. If you would invest  433,000  in Multipolar Technology Tbk on September 13, 2024 and sell it today you would earn a total of  1,622,000  from holding Multipolar Technology Tbk or generate 374.6% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Multipolar Technology Tbk  vs.  Wir Asia Tbk

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.

Wir Asia Tbk

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Wir Asia Tbk are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Wir Asia may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Multipolar Technology and Wir Asia

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

The idea behind Multipolar Technology Tbk and Wir Asia 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.