Correlation Between Elang Mahkota and Bakrieland Development
Can any of the company-specific risk be diversified away by investing in both Elang Mahkota and Bakrieland Development 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 Elang Mahkota and Bakrieland Development into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Elang Mahkota Teknologi and Bakrieland Development Tbk, you can compare the effects of market volatilities on Elang Mahkota and Bakrieland Development 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 Elang Mahkota with a short position of Bakrieland Development. Check out your portfolio center. Please also check ongoing floating volatility patterns of Elang Mahkota and Bakrieland Development.
Diversification Opportunities for Elang Mahkota and Bakrieland Development
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Elang and Bakrieland is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Elang Mahkota Teknologi and Bakrieland Development Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bakrieland Development and Elang Mahkota 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 Elang Mahkota Teknologi are associated (or correlated) with Bakrieland Development. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bakrieland Development has no effect on the direction of Elang Mahkota i.e., Elang Mahkota and Bakrieland Development go up and down completely randomly.
Pair Corralation between Elang Mahkota and Bakrieland Development
Assuming the 90 days trading horizon Elang Mahkota Teknologi is expected to generate 0.84 times more return on investment than Bakrieland Development. However, Elang Mahkota Teknologi is 1.19 times less risky than Bakrieland Development. It trades about 0.0 of its potential returns per unit of risk. Bakrieland Development Tbk is currently generating about -0.55 per unit of risk. If you would invest 49,600 in Elang Mahkota Teknologi on August 30, 2024 and sell it today you would lose (600.00) from holding Elang Mahkota Teknologi or give up 1.21% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Elang Mahkota Teknologi vs. Bakrieland Development Tbk
Performance |
| Timeline |
| Elang Mahkota Teknologi |
| Bakrieland Development |
Elang Mahkota and Bakrieland Development Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Elang Mahkota and Bakrieland Development
The main advantage of trading using opposite Elang Mahkota and Bakrieland Development positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Elang Mahkota position performs unexpectedly, Bakrieland Development 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 Bakrieland Development will offset losses from the drop in Bakrieland Development's long position.| Elang Mahkota vs. Bank Artos Indonesia | Elang Mahkota vs. PT Bukalapak | Elang Mahkota vs. Sumber Alfaria Trijaya | Elang Mahkota vs. Merdeka Copper Gold |
| Bakrieland Development vs. Bakrie Brothers Tbk | Bakrieland Development vs. Bakrie Sumatera Plantations | Bakrieland Development vs. Energi Mega Persada | Bakrieland Development vs. Darma Henwa 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 Global Correlations module to find global opportunities by holding instruments from different markets.
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