Correlation Between Mayora Indah and Kimia Farma

Can any of the company-specific risk be diversified away by investing in both Mayora Indah and Kimia Farma 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 Kimia Farma 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 Kimia Farma Persero, you can compare the effects of market volatilities on Mayora Indah and Kimia Farma 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 Kimia Farma. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mayora Indah and Kimia Farma.

Diversification Opportunities for Mayora Indah and Kimia Farma

0.51

Correlation Coefficient

Mayora Indah  Kimia Farma

Very weak diversification

The 3 months correlation between Mayora and Kimia is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Mayora Indah Tbk and Kimia Farma Persero in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kimia Farma Persero 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 Kimia Farma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kimia Farma Persero has no effect on the direction of Mayora Indah i.e., Mayora Indah and Kimia Farma go up and down completely randomly.

Pair Corralation between Mayora Indah and Kimia Farma

Assuming the 90 days trading horizon Mayora Indah Tbk is expected to generate 0.52 times more return on investment than Kimia Farma. However, Mayora Indah Tbk is 1.93 times less risky than Kimia Farma. It trades about 0.18 of its potential returns per unit of risk. Kimia Farma Persero is currently generating about 0.05 per unit of risk. If you would invest  261,000  in Mayora Indah Tbk on September 19, 2024 and sell it today you would earn a total of  12,000  from holding Mayora Indah Tbk or generate 4.6% return on investment over 90 days.

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

Mayora Indah Tbk  vs.  Kimia Farma Persero

Mayora Indah Tbk

Risk-Adjusted Performance

0 of 100

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 quite persistent forward-looking signals, Mayora Indah is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Kimia Farma Persero

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kimia Farma Persero 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 Mayora Indah and Kimia Farma

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

The idea behind Mayora Indah Tbk and Kimia Farma Persero 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.