Correlation Between Chandra Asri and PT Mulia

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Can any of the company-specific risk be diversified away by investing in both Chandra Asri and PT Mulia 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 Chandra Asri and PT Mulia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chandra Asri Petrochemical and PT Mulia Industrindo, you can compare the effects of market volatilities on Chandra Asri and PT Mulia 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 Chandra Asri with a short position of PT Mulia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chandra Asri and PT Mulia.

Diversification Opportunities for Chandra Asri and PT Mulia

0.83
  Correlation Coefficient

Very poor diversification

The 3 months correlation between Chandra and MLIA is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Chandra Asri Petrochemical and PT Mulia Industrindo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PT Mulia Industrindo and Chandra Asri 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 Chandra Asri Petrochemical are associated (or correlated) with PT Mulia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PT Mulia Industrindo has no effect on the direction of Chandra Asri i.e., Chandra Asri and PT Mulia go up and down completely randomly.

Pair Corralation between Chandra Asri and PT Mulia

Assuming the 90 days trading horizon Chandra Asri Petrochemical is expected to under-perform the PT Mulia. In addition to that, Chandra Asri is 9.28 times more volatile than PT Mulia Industrindo. It trades about -0.16 of its total potential returns per unit of risk. PT Mulia Industrindo is currently generating about -0.45 per unit of volatility. If you would invest  32,800  in PT Mulia Industrindo on September 3, 2024 and sell it today you would lose (1,600) from holding PT Mulia Industrindo or give up 4.88% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

Chandra Asri Petrochemical  vs.  PT Mulia Industrindo

 Performance 
       Timeline  
Chandra Asri Petroch 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Chandra Asri Petrochemical 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 forward-looking signals remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.
PT Mulia Industrindo 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days PT Mulia Industrindo 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 forward-looking signals remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Chandra Asri and PT Mulia Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Chandra Asri and PT Mulia

The main advantage of trading using opposite Chandra Asri and PT Mulia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chandra Asri position performs unexpectedly, PT Mulia 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 PT Mulia will offset losses from the drop in PT Mulia's long position.
The idea behind Chandra Asri Petrochemical and PT Mulia Industrindo 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.

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