Correlation Between Mayora Indah and Integra Indocabinet

Can any of the company-specific risk be diversified away by investing in both Mayora Indah and Integra Indocabinet 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 Mayora Indah and Integra Indocabinet into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Mayora Indah Tbk and Integra Indocabinet Tbk, you can compare the effects of market volatilities on Mayora Indah and Integra Indocabinet 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 Mayora Indah with a short position of Integra Indocabinet. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mayora Indah and Integra Indocabinet.

Diversification Opportunities for Mayora Indah and Integra Indocabinet

-0.72

Correlation Coefficient

Mayora Indah  Integra Indocabinet

Pay attention - limited upside

The 3 months correlation between Mayora and Integra is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Mayora Indah Tbk and Integra Indocabinet Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Integra Indocabinet Tbk and Mayora Indah 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 Mayora Indah Tbk are associated (or correlated) with Integra Indocabinet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Integra Indocabinet Tbk has no effect on the direction of Mayora Indah i.e., Mayora Indah and Integra Indocabinet go up and down completely randomly.

Pair Corralation between Mayora Indah and Integra Indocabinet

Assuming the 90 days trading horizon Mayora Indah Tbk is expected to under-perform the Integra Indocabinet. But the stock apears to be less risky and, when comparing its historical volatility, Mayora Indah Tbk is 1.75 times less risky than Integra Indocabinet. The stock trades about -0.21 of its potential returns per unit of risk. The Integra Indocabinet Tbk is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  31,200  in Integra Indocabinet Tbk on December 1, 2024 and sell it today you would earn a total of  3,800  from holding Integra Indocabinet Tbk or generate 12.18% return on investment over 90 days.

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

Mayora Indah Tbk  vs.  Integra Indocabinet Tbk

Mayora Indah Tbk

Risk-Adjusted Performance

Very Weak

Over the last 90 days Mayora Indah 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 April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Integra Indocabinet Tbk

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Integra Indocabinet Tbk are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Integra Indocabinet disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Mayora Indah and Integra Indocabinet

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

The idea behind Mayora Indah Tbk and Integra Indocabinet 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.

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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.