Correlation Between Estika Tata and Communication Cable
Can any of the company-specific risk be diversified away by investing in both Estika Tata and Communication Cable 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 Estika Tata and Communication Cable into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Estika Tata Tiara and Communication Cable Systems, you can compare the effects of market volatilities on Estika Tata and Communication Cable 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 Estika Tata with a short position of Communication Cable. Check out your portfolio center. Please also check ongoing floating volatility patterns of Estika Tata and Communication Cable.
Diversification Opportunities for Estika Tata and Communication Cable
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Estika and Communication is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Estika Tata Tiara and Communication Cable Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Communication Cable and Estika Tata 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 Estika Tata Tiara are associated (or correlated) with Communication Cable. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Communication Cable has no effect on the direction of Estika Tata i.e., Estika Tata and Communication Cable go up and down completely randomly.
Pair Corralation between Estika Tata and Communication Cable
Assuming the 90 days trading horizon Estika Tata Tiara is expected to under-perform the Communication Cable. But the stock apears to be less risky and, when comparing its historical volatility, Estika Tata Tiara is 2.55 times less risky than Communication Cable. The stock trades about -0.24 of its potential returns per unit of risk. The Communication Cable Systems is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 24,600 in Communication Cable Systems on August 29, 2024 and sell it today you would earn a total of 1,400 from holding Communication Cable Systems or generate 5.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Estika Tata Tiara vs. Communication Cable Systems
Performance |
| Timeline |
| Estika Tata Tiara |
| Communication Cable |
Estika Tata and Communication Cable Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Estika Tata and Communication Cable
The main advantage of trading using opposite Estika Tata and Communication Cable positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Estika Tata position performs unexpectedly, Communication Cable 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 Communication Cable will offset losses from the drop in Communication Cable's long position.| Estika Tata vs. Buyung Poetra Sembada | Estika Tata vs. Garudafood Putra Putri | Estika Tata vs. Campina Ice Cream | Estika Tata vs. Wijaya Karya Bangunan |
| Communication Cable vs. Hartadinata Abadi Tbk | Communication Cable vs. Estika Tata Tiara | Communication Cable vs. Garudafood Putra Putri | Communication Cable vs. PT Indonesia Kendaraan |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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