Correlation Between Bank Rakyat and Era Media
Can any of the company-specific risk be diversified away by investing in both Bank Rakyat and Era Media 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 Bank Rakyat and Era Media into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bank Rakyat Indonesia and Era Media Sejahtera, you can compare the effects of market volatilities on Bank Rakyat and Era Media 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 Bank Rakyat with a short position of Era Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank Rakyat and Era Media.
Diversification Opportunities for Bank Rakyat and Era Media
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Bank and Era is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Bank Rakyat Indonesia and Era Media Sejahtera in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Era Media Sejahtera and Bank Rakyat 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 Bank Rakyat Indonesia are associated (or correlated) with Era Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Era Media Sejahtera has no effect on the direction of Bank Rakyat i.e., Bank Rakyat and Era Media go up and down completely randomly.
Pair Corralation between Bank Rakyat and Era Media
Assuming the 90 days trading horizon Bank Rakyat Indonesia is expected to under-perform the Era Media. But the stock apears to be less risky and, when comparing its historical volatility, Bank Rakyat Indonesia is 1.57 times less risky than Era Media. The stock trades about -0.48 of its potential returns per unit of risk. The Era Media Sejahtera is currently generating about -0.23 of returns per unit of risk over similar time horizon. If you would invest 6,100 in Era Media Sejahtera on August 24, 2024 and sell it today you would lose (600.00) from holding Era Media Sejahtera or give up 9.84% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank Rakyat Indonesia vs. Era Media Sejahtera
Performance |
| Timeline |
| Bank Rakyat Indonesia |
| Era Media Sejahtera |
Bank Rakyat and Era Media Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank Rakyat and Era Media
The main advantage of trading using opposite Bank Rakyat and Era Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank Rakyat position performs unexpectedly, Era Media 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 Era Media will offset losses from the drop in Era Media's long position.| Bank Rakyat vs. Bank Central Asia | Bank Rakyat vs. Bank Mandiri Persero | Bank Rakyat vs. Bank Negara Indonesia | Bank Rakyat vs. Telkom Indonesia Tbk |
| Era Media vs. Bank Central Asia | Era Media vs. Bank Rakyat Indonesia | Era Media vs. Bayan Resources Tbk | Era Media vs. Bank Mandiri Persero |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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