Correlation Between Electronic City and Arita Prima
Can any of the company-specific risk be diversified away by investing in both Electronic City and Arita Prima 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 Electronic City and Arita Prima into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Electronic City Indonesia and Arita Prima Indonesia, you can compare the effects of market volatilities on Electronic City and Arita Prima 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 Electronic City with a short position of Arita Prima. Check out your portfolio center. Please also check ongoing floating volatility patterns of Electronic City and Arita Prima.
Diversification Opportunities for Electronic City and Arita Prima
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Electronic and Arita is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Electronic City Indonesia and Arita Prima Indonesia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arita Prima Indonesia and Electronic City 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 Electronic City Indonesia are associated (or correlated) with Arita Prima. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arita Prima Indonesia has no effect on the direction of Electronic City i.e., Electronic City and Arita Prima go up and down completely randomly.
Pair Corralation between Electronic City and Arita Prima
Assuming the 90 days trading horizon Electronic City Indonesia is expected to under-perform the Arita Prima. In addition to that, Electronic City is 2.61 times more volatile than Arita Prima Indonesia. It trades about -0.03 of its total potential returns per unit of risk. Arita Prima Indonesia is currently generating about -0.01 per unit of volatility. If you would invest 20,000 in Arita Prima Indonesia on August 27, 2024 and sell it today you would lose (1,700) from holding Arita Prima Indonesia or give up 8.5% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Electronic City Indonesia vs. Arita Prima Indonesia
Performance |
| Timeline |
| Electronic City Indonesia |
| Arita Prima Indonesia |
Electronic City and Arita Prima Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Electronic City and Arita Prima
The main advantage of trading using opposite Electronic City and Arita Prima positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Electronic City position performs unexpectedly, Arita Prima 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 Arita Prima will offset losses from the drop in Arita Prima's long position.| Electronic City vs. Catur Sentosa Adiprana | Electronic City vs. Fast Food Indonesia | Electronic City vs. Hero Supermarket Tbk | Electronic City vs. Graha Layar Prima |
| Arita Prima vs. Bintang Mitra Semestaraya | Arita Prima vs. Alkindo Naratama Tbk | Arita Prima vs. Bayu Buana Tbk | Arita Prima vs. Austindo Nusantara Jaya |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
Other Complementary Tools
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios | |
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators | |
| Money Managers Screen money managers from public funds and ETFs managed around the world |