Correlation Between Integra Indocabinet and Pelita Samudera

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

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

Diversification Opportunities for Integra Indocabinet and Pelita Samudera

-0.24

Correlation Coefficient

Integra Indocabinet  Pelita Samudera

Very good diversification

The 3 months correlation between Integra and Pelita is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Integra Indocabinet Tbk and Pelita Samudera Shipping in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pelita Samudera Shipping and Integra Indocabinet 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 Integra Indocabinet Tbk are associated (or correlated) with Pelita Samudera. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pelita Samudera Shipping has no effect on the direction of Integra Indocabinet i.e., Integra Indocabinet and Pelita Samudera go up and down completely randomly.

Pair Corralation between Integra Indocabinet and Pelita Samudera

Assuming the 90 days trading horizon Integra Indocabinet Tbk is expected to generate 5.8 times more return on investment than Pelita Samudera. However, Integra Indocabinet is 5.8 times more volatile than Pelita Samudera Shipping. It trades about 0.16 of its potential returns per unit of risk. Pelita Samudera Shipping is currently generating about -0.05 per unit of risk. If you would invest  23,800  in Integra Indocabinet Tbk on September 16, 2024 and sell it today you would earn a total of  10,800  from holding Integra Indocabinet Tbk or generate 45.38% return on investment over 90 days.

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

Integra Indocabinet Tbk  vs.  Pelita Samudera Shipping

Integra Indocabinet Tbk

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Integra Indocabinet Tbk are ranked lower than 12 (%) 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.

Pelita Samudera Shipping

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pelita Samudera Shipping has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Pelita Samudera 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 Integra Indocabinet and Pelita Samudera

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

The idea behind Integra Indocabinet Tbk and Pelita Samudera Shipping 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.