Correlation Between Arita Prima and Electronic City
Can any of the company-specific risk be diversified away by investing in both Arita Prima and Electronic City 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 Arita Prima and Electronic City into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Arita Prima Indonesia and Electronic City Indonesia, you can compare the effects of market volatilities on Arita Prima and Electronic City 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 Arita Prima with a short position of Electronic City. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arita Prima and Electronic City.
Diversification Opportunities for Arita Prima and Electronic City
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Arita and Electronic is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Arita Prima Indonesia and Electronic City Indonesia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Electronic City Indonesia and Arita Prima 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 Arita Prima Indonesia are associated (or correlated) with Electronic City. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Electronic City Indonesia has no effect on the direction of Arita Prima i.e., Arita Prima and Electronic City go up and down completely randomly.
Pair Corralation between Arita Prima and Electronic City
Assuming the 90 days trading horizon Arita Prima Indonesia is expected to under-perform the Electronic City. But the stock apears to be less risky and, when comparing its historical volatility, Arita Prima Indonesia is 8.0 times less risky than Electronic City. The stock trades about -0.09 of its potential returns per unit of risk. The Electronic City Indonesia is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 19,800 in Electronic City Indonesia on August 30, 2024 and sell it today you would earn a total of 8,800 from holding Electronic City Indonesia or generate 44.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Arita Prima Indonesia vs. Electronic City Indonesia
Performance |
| Timeline |
| Arita Prima Indonesia |
| Electronic City Indonesia |
Arita Prima and Electronic City Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Arita Prima and Electronic City
The main advantage of trading using opposite Arita Prima and Electronic City positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Arita Prima position performs unexpectedly, Electronic City 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 Electronic City will offset losses from the drop in Electronic City's long position.| Arita Prima vs. Bintang Mitra Semestaraya | Arita Prima vs. Alkindo Naratama Tbk | Arita Prima vs. Bayu Buana Tbk | Arita Prima vs. Austindo Nusantara Jaya |
| Electronic City vs. Catur Sentosa Adiprana | Electronic City vs. Fast Food Indonesia | Electronic City vs. Hero Supermarket Tbk | Electronic City vs. Graha Layar Prima |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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