Correlation Between Multistrada Arah and Atlas Resources

Can any of the company-specific risk be diversified away by investing in both Multistrada Arah and Atlas Resources 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 Atlas Resources 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 Atlas Resources Tbk, you can compare the effects of market volatilities on Multistrada Arah and Atlas Resources 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 Atlas Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Multistrada Arah and Atlas Resources.

Diversification Opportunities for Multistrada Arah and Atlas Resources

0.81

Correlation Coefficient

Multistrada Arah  Atlas Resources

Very poor diversification

The 3 months correlation between Multistrada and Atlas is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Multistrada Arah Sarana and Atlas Resources Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Atlas Resources 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 Atlas Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Atlas Resources Tbk has no effect on the direction of Multistrada Arah i.e., Multistrada Arah and Atlas Resources go up and down completely randomly.

Pair Corralation between Multistrada Arah and Atlas Resources

Assuming the 90 days trading horizon Multistrada Arah Sarana is expected to generate 0.85 times more return on investment than Atlas Resources. However, Multistrada Arah Sarana is 1.17 times less risky than Atlas Resources. It trades about 0.04 of its potential returns per unit of risk. Atlas Resources Tbk is currently generating about 0.03 per unit of risk. If you would invest  355,992  in Multistrada Arah Sarana on February 4, 2024 and sell it today you would earn a total of  186,508  from holding Multistrada Arah Sarana or generate 52.39% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	99.78%
Values	Daily Returns

Multistrada Arah Sarana  vs.  Atlas Resources Tbk

Multistrada Arah Sarana

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Multistrada Arah Sarana are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, Multistrada Arah disclosed solid returns over the last few months and may actually be approaching a breakup point.

Atlas Resources Tbk

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Atlas Resources Tbk are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, Atlas Resources disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Multistrada Arah and Atlas Resources

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

The idea behind Multistrada Arah Sarana and Atlas Resources 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.