Correlation Between Indosterling Technomedia and Mayora Indah
Can any of the company-specific risk be diversified away by investing in both Indosterling Technomedia and Mayora Indah 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 Indosterling Technomedia and Mayora Indah into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Indosterling Technomedia Tbk and Mayora Indah Tbk, you can compare the effects of market volatilities on Indosterling Technomedia and Mayora Indah 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 Indosterling Technomedia with a short position of Mayora Indah. Check out your portfolio center. Please also check ongoing floating volatility patterns of Indosterling Technomedia and Mayora Indah.
Diversification Opportunities for Indosterling Technomedia and Mayora Indah
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Indosterling and Mayora is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Indosterling Technomedia Tbk and Mayora Indah Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mayora Indah Tbk and Indosterling Technomedia 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 Indosterling Technomedia Tbk are associated (or correlated) with Mayora Indah. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mayora Indah Tbk has no effect on the direction of Indosterling Technomedia i.e., Indosterling Technomedia and Mayora Indah go up and down completely randomly.
Pair Corralation between Indosterling Technomedia and Mayora Indah
If you would invest 234,477 in Mayora Indah Tbk on September 3, 2024 and sell it today you would earn a total of 38,523 from holding Mayora Indah Tbk or generate 16.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Indosterling Technomedia Tbk vs. Mayora Indah Tbk
Performance |
| Timeline |
| Indosterling Technomedia |
| Mayora Indah Tbk |
Indosterling Technomedia and Mayora Indah Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Indosterling Technomedia and Mayora Indah
The main advantage of trading using opposite Indosterling Technomedia and Mayora Indah positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Indosterling Technomedia position performs unexpectedly, Mayora Indah 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 Mayora Indah will offset losses from the drop in Mayora Indah's long position.The idea behind Indosterling Technomedia Tbk and Mayora Indah 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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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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