Correlation Between Ekadharma International and Arwana Citramulia
Can any of the company-specific risk be diversified away by investing in both Ekadharma International and Arwana Citramulia 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 Ekadharma International and Arwana Citramulia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ekadharma International Tbk and Arwana Citramulia Tbk, you can compare the effects of market volatilities on Ekadharma International and Arwana Citramulia 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 Ekadharma International with a short position of Arwana Citramulia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ekadharma International and Arwana Citramulia.
Diversification Opportunities for Ekadharma International and Arwana Citramulia
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Ekadharma and Arwana is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Ekadharma International Tbk and Arwana Citramulia Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arwana Citramulia Tbk and Ekadharma International 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 Ekadharma International Tbk are associated (or correlated) with Arwana Citramulia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arwana Citramulia Tbk has no effect on the direction of Ekadharma International i.e., Ekadharma International and Arwana Citramulia go up and down completely randomly.
Pair Corralation between Ekadharma International and Arwana Citramulia
Assuming the 90 days trading horizon Ekadharma International Tbk is expected to generate 0.49 times more return on investment than Arwana Citramulia. However, Ekadharma International Tbk is 2.02 times less risky than Arwana Citramulia. It trades about -0.05 of its potential returns per unit of risk. Arwana Citramulia Tbk is currently generating about -0.36 per unit of risk. If you would invest 21,200 in Ekadharma International Tbk on November 7, 2024 and sell it today you would lose (200.00) from holding Ekadharma International Tbk or give up 0.94% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ekadharma International Tbk vs. Arwana Citramulia Tbk
Performance |
| Timeline |
| Ekadharma International |
| Arwana Citramulia Tbk |
Ekadharma International and Arwana Citramulia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ekadharma International and Arwana Citramulia
The main advantage of trading using opposite Ekadharma International and Arwana Citramulia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ekadharma International position performs unexpectedly, Arwana Citramulia 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 Arwana Citramulia will offset losses from the drop in Arwana Citramulia's long position.| Ekadharma International vs. Ultra Jaya Milk | Ekadharma International vs. Colorpak Indonesia Tbk | Ekadharma International vs. Champion Pacific Indonesia | Ekadharma International vs. Duta Pertiwi Nusantara |
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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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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