Correlation Between Indorama Synthetics and Mitra Energi

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

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

Diversification Opportunities for Indorama Synthetics and Mitra Energi

-0.53

Correlation Coefficient

Indorama Synthetics  Mitra Energi

Excellent diversification

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

Pair Corralation between Indorama Synthetics and Mitra Energi

Assuming the 90 days trading horizon Indorama Synthetics Tbk is expected to under-perform the Mitra Energi. But the stock apears to be less risky and, when comparing its historical volatility, Indorama Synthetics Tbk is 2.51 times less risky than Mitra Energi. The stock trades about -0.07 of its potential returns per unit of risk. The Mitra Energi Persada is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  53,000  in Mitra Energi Persada on October 11, 2024 and sell it today you would earn a total of  8,000  from holding Mitra Energi Persada or generate 15.09% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	99.79%
Values	Daily Returns

Indorama Synthetics Tbk  vs.  Mitra Energi Persada

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 February 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Mitra Energi Persada

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Mitra Energi Persada are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent forward-looking signals, Mitra Energi is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Indorama Synthetics and Mitra Energi

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

The idea behind Indorama Synthetics Tbk and Mitra Energi Persada 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.