Correlation Between Multi Bintang and Akbar Indomakmur

Can any of the company-specific risk be diversified away by investing in both Multi Bintang and Akbar Indomakmur 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 Bintang and Akbar Indomakmur into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Multi Bintang Indonesia and Akbar Indomakmur Stimec, you can compare the effects of market volatilities on Multi Bintang and Akbar Indomakmur 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 Bintang with a short position of Akbar Indomakmur. Check out your portfolio center. Please also check ongoing floating volatility patterns of Multi Bintang and Akbar Indomakmur.

Diversification Opportunities for Multi Bintang and Akbar Indomakmur

0.59

Correlation Coefficient

Multi Bintang  Akbar Indomakmur

Very weak diversification

The 3 months correlation between Multi and Akbar is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Multi Bintang Indonesia and Akbar Indomakmur Stimec in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Akbar Indomakmur Stimec and Multi Bintang 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 Bintang Indonesia are associated (or correlated) with Akbar Indomakmur. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Akbar Indomakmur Stimec has no effect on the direction of Multi Bintang i.e., Multi Bintang and Akbar Indomakmur go up and down completely randomly.

Pair Corralation between Multi Bintang and Akbar Indomakmur

Assuming the 90 days trading horizon Multi Bintang Indonesia is expected to under-perform the Akbar Indomakmur. But the stock apears to be less risky and, when comparing its historical volatility, Multi Bintang Indonesia is 6.04 times less risky than Akbar Indomakmur. The stock trades about -0.45 of its potential returns per unit of risk. The Akbar Indomakmur Stimec is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  49,000  in Akbar Indomakmur Stimec on February 5, 2024 and sell it today you would earn a total of  5,500  from holding Akbar Indomakmur Stimec or generate 11.22% return on investment over 90 days.

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

Multi Bintang Indonesia  vs.  Akbar Indomakmur Stimec

Multi Bintang Indonesia

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Multi Bintang Indonesia has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Akbar Indomakmur Stimec

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Akbar Indomakmur Stimec 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 basic indicators remain quite persistent which may send shares a bit higher in June 2024. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Multi Bintang and Akbar Indomakmur

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

The idea behind Multi Bintang Indonesia and Akbar Indomakmur Stimec 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.

Check out your portfolio center.

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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.