Correlation Between Indo Acidatama and PT Mulia

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

Diversification Opportunities for Indo Acidatama and PT Mulia

0.81
  Correlation Coefficient

Very poor diversification

The 3 months correlation between Indo and MLIA is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Indo Acidatama Tbk 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 Indo Acidatama 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 Indo Acidatama Tbk 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 Indo Acidatama i.e., Indo Acidatama and PT Mulia go up and down completely randomly.

Pair Corralation between Indo Acidatama and PT Mulia

Assuming the 90 days trading horizon Indo Acidatama Tbk is expected to under-perform the PT Mulia. In addition to that, Indo Acidatama is 1.15 times more volatile than PT Mulia Industrindo. It trades about -0.09 of its total potential returns per unit of risk. PT Mulia Industrindo is currently generating about -0.1 per unit of volatility. If you would invest  32,800  in PT Mulia Industrindo on September 7, 2024 and sell it today you would lose (600.00) from holding PT Mulia Industrindo or give up 1.83% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

Indo Acidatama Tbk  vs.  PT Mulia Industrindo

 Performance 
       Timeline  
Indo Acidatama Tbk 

Risk-Adjusted Performance

0 of 100

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

Indo Acidatama and PT Mulia Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Indo Acidatama and PT Mulia

The main advantage of trading using opposite Indo Acidatama and PT Mulia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Indo Acidatama 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 Indo Acidatama Tbk 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.

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