Correlation Between Multipolar Technology and M Cash

Can any of the company-specific risk be diversified away by investing in both Multipolar Technology and M Cash 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 M Cash 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 M Cash Integrasi, you can compare the effects of market volatilities on Multipolar Technology and M Cash 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 M Cash. Check out your portfolio center. Please also check ongoing floating volatility patterns of Multipolar Technology and M Cash.

Diversification Opportunities for Multipolar Technology and M Cash

0.53

Correlation Coefficient

Multipolar Technology  M Cash

Very weak diversification

The 3 months correlation between Multipolar and MCAS is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Multipolar Technology Tbk and M Cash Integrasi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on M Cash Integrasi 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 M Cash. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of M Cash Integrasi has no effect on the direction of Multipolar Technology i.e., Multipolar Technology and M Cash go up and down completely randomly.

Pair Corralation between Multipolar Technology and M Cash

Assuming the 90 days trading horizon Multipolar Technology Tbk is expected to generate 0.8 times more return on investment than M Cash. However, Multipolar Technology Tbk is 1.25 times less risky than M Cash. It trades about -0.03 of its potential returns per unit of risk. M Cash Integrasi is currently generating about -0.23 per unit of risk. If you would invest  157,000  in Multipolar Technology Tbk on February 3, 2024 and sell it today you would lose (1,500) from holding Multipolar Technology Tbk or give up 0.96% of portfolio value over 90 days.

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

Multipolar Technology Tbk  vs.  M Cash Integrasi

Multipolar Technology Tbk

Risk-Adjusted Performance

0 of 100

Weak

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

M Cash Integrasi

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days M Cash Integrasi 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 Multipolar Technology and M Cash

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

The idea behind Multipolar Technology Tbk and M Cash Integrasi 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.