Correlation Between Mitra Pinasthika and Indah Kiat
Can any of the company-specific risk be diversified away by investing in both Mitra Pinasthika and Indah Kiat 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 Mitra Pinasthika and Indah Kiat into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mitra Pinasthika Mustika and Indah Kiat Pulp, you can compare the effects of market volatilities on Mitra Pinasthika and Indah Kiat 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 Mitra Pinasthika with a short position of Indah Kiat. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mitra Pinasthika and Indah Kiat.
Diversification Opportunities for Mitra Pinasthika and Indah Kiat
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Mitra and Indah is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Mitra Pinasthika Mustika and Indah Kiat Pulp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Indah Kiat Pulp and Mitra Pinasthika 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 Mitra Pinasthika Mustika are associated (or correlated) with Indah Kiat. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Indah Kiat Pulp has no effect on the direction of Mitra Pinasthika i.e., Mitra Pinasthika and Indah Kiat go up and down completely randomly.
Pair Corralation between Mitra Pinasthika and Indah Kiat
Assuming the 90 days trading horizon Mitra Pinasthika Mustika is expected to under-perform the Indah Kiat. But the stock apears to be less risky and, when comparing its historical volatility, Mitra Pinasthika Mustika is 3.1 times less risky than Indah Kiat. The stock trades about -0.17 of its potential returns per unit of risk. The Indah Kiat Pulp is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest 732,500 in Indah Kiat Pulp on September 3, 2024 and sell it today you would lose (7,500) from holding Indah Kiat Pulp or give up 1.02% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mitra Pinasthika Mustika vs. Indah Kiat Pulp
Performance |
| Timeline |
| Mitra Pinasthika Mustika |
| Indah Kiat Pulp |
Mitra Pinasthika and Indah Kiat Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mitra Pinasthika and Indah Kiat
The main advantage of trading using opposite Mitra Pinasthika and Indah Kiat positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mitra Pinasthika position performs unexpectedly, Indah Kiat 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 Indah Kiat will offset losses from the drop in Indah Kiat's long position.| Mitra Pinasthika vs. Saratoga Investama Sedaya | Mitra Pinasthika vs. Puradelta Lestari PT | Mitra Pinasthika vs. Cikarang Listrindo Tbk | Mitra Pinasthika vs. Erajaya Swasembada Tbk |
| Indah Kiat vs. Pabrik Kertas Tjiwi | Indah Kiat vs. Indocement Tunggal Prakarsa | Indah Kiat vs. Barito Pacific Tbk | Indah Kiat vs. United Tractors Tbk |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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