Correlation Between Cisarua Mountain and Indorama Synthetics

Can any of the company-specific risk be diversified away by investing in both Cisarua Mountain and Indorama Synthetics 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 Cisarua Mountain and Indorama Synthetics into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Cisarua Mountain Dairy and Indorama Synthetics Tbk, you can compare the effects of market volatilities on Cisarua Mountain and Indorama Synthetics 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 Cisarua Mountain with a short position of Indorama Synthetics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cisarua Mountain and Indorama Synthetics.

Diversification Opportunities for Cisarua Mountain and Indorama Synthetics

-0.26

Correlation Coefficient

Cisarua Mountain  Indorama Synthetics

Very good diversification

The 3 months correlation between Cisarua and Indorama is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Cisarua Mountain Dairy and Indorama Synthetics Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Indorama Synthetics Tbk and Cisarua Mountain 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 Cisarua Mountain Dairy are associated (or correlated) with Indorama Synthetics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Indorama Synthetics Tbk has no effect on the direction of Cisarua Mountain i.e., Cisarua Mountain and Indorama Synthetics go up and down completely randomly.

Pair Corralation between Cisarua Mountain and Indorama Synthetics

Assuming the 90 days trading horizon Cisarua Mountain Dairy is expected to generate 0.94 times more return on investment than Indorama Synthetics. However, Cisarua Mountain Dairy is 1.06 times less risky than Indorama Synthetics. It trades about 0.06 of its potential returns per unit of risk. Indorama Synthetics Tbk is currently generating about -0.15 per unit of risk. If you would invest  515,000  in Cisarua Mountain Dairy on September 4, 2024 and sell it today you would earn a total of  35,000  from holding Cisarua Mountain Dairy or generate 6.8% return on investment over 90 days.

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

Cisarua Mountain Dairy  vs.  Indorama Synthetics Tbk

Cisarua Mountain Dairy

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Cisarua Mountain Dairy are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Cisarua Mountain may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Indorama Synthetics Tbk

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Indorama Synthetics Tbk 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.

Pair Trading with Cisarua Mountain and Indorama Synthetics

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

The idea behind Cisarua Mountain Dairy and Indorama Synthetics 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.