Correlation Between Electronic City and Graha Layar
Can any of the company-specific risk be diversified away by investing in both Electronic City and Graha Layar 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 Graha Layar 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 Graha Layar Prima, you can compare the effects of market volatilities on Electronic City and Graha Layar 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 Graha Layar. Check out your portfolio center. Please also check ongoing floating volatility patterns of Electronic City and Graha Layar.
Diversification Opportunities for Electronic City and Graha Layar
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between Electronic and Graha is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Electronic City Indonesia and Graha Layar Prima in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Graha Layar Prima 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 Graha Layar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Graha Layar Prima has no effect on the direction of Electronic City i.e., Electronic City and Graha Layar go up and down completely randomly.
Pair Corralation between Electronic City and Graha Layar
Assuming the 90 days trading horizon Electronic City Indonesia is expected to generate 6.68 times more return on investment than Graha Layar. However, Electronic City is 6.68 times more volatile than Graha Layar Prima. It trades about 0.11 of its potential returns per unit of risk. Graha Layar Prima is currently generating about -0.31 per unit of risk. If you would invest 19,800 in Electronic City Indonesia on August 30, 2024 and sell it today you would earn a total of 3,200 from holding Electronic City Indonesia or generate 16.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Electronic City Indonesia vs. Graha Layar Prima
Performance |
| Timeline |
| Electronic City Indonesia |
| Graha Layar Prima |
Electronic City and Graha Layar Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Electronic City and Graha Layar
The main advantage of trading using opposite Electronic City and Graha Layar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Electronic City position performs unexpectedly, Graha Layar 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 Graha Layar will offset losses from the drop in Graha Layar's long position.| Electronic City vs. Fast Food Indonesia | Electronic City vs. Hero Supermarket Tbk | Electronic City vs. Graha Layar Prima | Electronic City vs. Dyandra Media International |
| Graha Layar vs. Electronic City Indonesia | Graha Layar vs. Bayu Buana Tbk | Graha Layar vs. Bintang Oto Global | Graha Layar vs. Garuda Metalindo Tbk |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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