Correlation Between Pembangunan Graha and Multipolar Tbk

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

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

Diversification Opportunities for Pembangunan Graha and Multipolar Tbk

0.58

Correlation Coefficient

Pembangunan Graha  Multipolar Tbk

Very weak diversification

The 3 months correlation between Pembangunan and Multipolar is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Pembangunan Graha Lestari and Multipolar Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Multipolar Tbk and Pembangunan Graha 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 Pembangunan Graha Lestari are associated (or correlated) with Multipolar Tbk. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Multipolar Tbk has no effect on the direction of Pembangunan Graha i.e., Pembangunan Graha and Multipolar Tbk go up and down completely randomly.

Pair Corralation between Pembangunan Graha and Multipolar Tbk

Assuming the 90 days trading horizon Pembangunan Graha is expected to generate 5.83 times less return on investment than Multipolar Tbk. But when comparing it to its historical volatility, Pembangunan Graha Lestari is 2.97 times less risky than Multipolar Tbk. It trades about 0.06 of its potential returns per unit of risk. Multipolar Tbk is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  8,100  in Multipolar Tbk on September 12, 2024 and sell it today you would earn a total of  4,100  from holding Multipolar Tbk or generate 50.62% return on investment over 90 days.

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

Pembangunan Graha Lestari  vs.  Multipolar Tbk

Pembangunan Graha Lestari

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Pembangunan Graha Lestari are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Pembangunan Graha may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Multipolar Tbk

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Multipolar Tbk are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Multipolar Tbk disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Pembangunan Graha and Multipolar Tbk

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

The idea behind Pembangunan Graha Lestari and Multipolar 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.