Correlation Between Millennium Pharmacon and Integra Indocabinet

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

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

Diversification Opportunities for Millennium Pharmacon and Integra Indocabinet

0.02

Correlation Coefficient

Millennium Pharmacon  Integra Indocabinet

Significant diversification

The 3 months correlation between Millennium and Integra is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Millennium Pharmacon Internati 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 Millennium Pharmacon 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 Millennium Pharmacon International 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 Millennium Pharmacon i.e., Millennium Pharmacon and Integra Indocabinet go up and down completely randomly.

Pair Corralation between Millennium Pharmacon and Integra Indocabinet

Assuming the 90 days trading horizon Millennium Pharmacon International is expected to under-perform the Integra Indocabinet. In addition to that, Millennium Pharmacon is 1.39 times more volatile than Integra Indocabinet Tbk. It trades about -0.01 of its total potential returns per unit of risk. Integra Indocabinet Tbk is currently generating about 0.01 per unit of volatility. If you would invest  34,000  in Integra Indocabinet Tbk on September 29, 2024 and sell it today you would lose (3,600) from holding Integra Indocabinet Tbk or give up 10.59% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	99.58%
Values	Daily Returns

Millennium Pharmacon Internati  vs.  Integra Indocabinet Tbk

Millennium Pharmacon

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Millennium Pharmacon International has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Millennium Pharmacon is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Integra Indocabinet Tbk

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Integra Indocabinet Tbk are ranked lower than 8 (%) 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 Millennium Pharmacon and Integra Indocabinet

The main advantage of trading using opposite Millennium Pharmacon and Integra Indocabinet positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Millennium Pharmacon 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 Millennium Pharmacon International 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.

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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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.