Correlation Between Colorpak Indonesia and Ekadharma International
Can any of the company-specific risk be diversified away by investing in both Colorpak Indonesia and Ekadharma International 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 Colorpak Indonesia and Ekadharma International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Colorpak Indonesia Tbk and Ekadharma International Tbk, you can compare the effects of market volatilities on Colorpak Indonesia and Ekadharma International 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 Colorpak Indonesia with a short position of Ekadharma International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Colorpak Indonesia and Ekadharma International.
Diversification Opportunities for Colorpak Indonesia and Ekadharma International
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Colorpak and Ekadharma is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Colorpak Indonesia Tbk and Ekadharma International Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ekadharma International and Colorpak Indonesia 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 Colorpak Indonesia Tbk are associated (or correlated) with Ekadharma International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ekadharma International has no effect on the direction of Colorpak Indonesia i.e., Colorpak Indonesia and Ekadharma International go up and down completely randomly.
Pair Corralation between Colorpak Indonesia and Ekadharma International
Assuming the 90 days trading horizon Colorpak Indonesia Tbk is expected to generate 0.78 times more return on investment than Ekadharma International. However, Colorpak Indonesia Tbk is 1.28 times less risky than Ekadharma International. It trades about 0.09 of its potential returns per unit of risk. Ekadharma International Tbk is currently generating about -0.02 per unit of risk. If you would invest 81,234 in Colorpak Indonesia Tbk on August 30, 2024 and sell it today you would earn a total of 23,766 from holding Colorpak Indonesia Tbk or generate 29.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.74% |
| Values | Daily Returns |
Colorpak Indonesia Tbk vs. Ekadharma International Tbk
Performance |
| Timeline |
| Colorpak Indonesia Tbk |
| Ekadharma International |
Colorpak Indonesia and Ekadharma International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Colorpak Indonesia and Ekadharma International
The main advantage of trading using opposite Colorpak Indonesia and Ekadharma International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Colorpak Indonesia position performs unexpectedly, Ekadharma International 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 Ekadharma International will offset losses from the drop in Ekadharma International's long position.| Colorpak Indonesia vs. Ekadharma International Tbk | Colorpak Indonesia vs. Enseval Putra Megatrading | Colorpak Indonesia vs. Duta Pertiwi Nusantara | Colorpak Indonesia vs. Wilmar Cahaya Indonesia |
| Ekadharma International vs. Ultra Jaya Milk | Ekadharma International vs. Colorpak Indonesia Tbk | Ekadharma International vs. Champion Pacific Indonesia | Ekadharma International vs. Duta Pertiwi Nusantara |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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