Correlation Between Era Media and Sentra Food
Can any of the company-specific risk be diversified away by investing in both Era Media and Sentra Food 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 Era Media and Sentra Food into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Era Media Sejahtera and Sentra Food Indonesia, you can compare the effects of market volatilities on Era Media and Sentra Food 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 Era Media with a short position of Sentra Food. Check out your portfolio center. Please also check ongoing floating volatility patterns of Era Media and Sentra Food.
Diversification Opportunities for Era Media and Sentra Food
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Era and Sentra is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Era Media Sejahtera and Sentra Food Indonesia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sentra Food Indonesia and Era Media 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 Era Media Sejahtera are associated (or correlated) with Sentra Food. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sentra Food Indonesia has no effect on the direction of Era Media i.e., Era Media and Sentra Food go up and down completely randomly.
Pair Corralation between Era Media and Sentra Food
Assuming the 90 days trading horizon Era Media Sejahtera is expected to generate 1.59 times more return on investment than Sentra Food. However, Era Media is 1.59 times more volatile than Sentra Food Indonesia. It trades about -0.05 of its potential returns per unit of risk. Sentra Food Indonesia is currently generating about -0.08 per unit of risk. If you would invest 5,600 in Era Media Sejahtera on September 2, 2024 and sell it today you would lose (100.00) from holding Era Media Sejahtera or give up 1.79% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Era Media Sejahtera vs. Sentra Food Indonesia
Performance |
| Timeline |
| Era Media Sejahtera |
| Sentra Food Indonesia |
Era Media and Sentra Food Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Era Media and Sentra Food
The main advantage of trading using opposite Era Media and Sentra Food positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Era Media position performs unexpectedly, Sentra Food 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 Sentra Food will offset losses from the drop in Sentra Food's long position.| Era Media vs. Bank Central Asia | Era Media vs. Bank Rakyat Indonesia | Era Media vs. Bayan Resources Tbk | Era Media vs. Bank Mandiri Persero |
| Sentra Food vs. Garudafood Putra Putri | Sentra Food vs. Estika Tata Tiara | Sentra Food vs. Campina Ice Cream | Sentra Food vs. PT Wahana Interfood |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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