Correlation Between Elang Mahkota and Teladan Prima
Can any of the company-specific risk be diversified away by investing in both Elang Mahkota and Teladan 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 Elang Mahkota and Teladan Prima 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 Teladan Prima Agro, you can compare the effects of market volatilities on Elang Mahkota and Teladan 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 Elang Mahkota with a short position of Teladan Prima. Check out your portfolio center. Please also check ongoing floating volatility patterns of Elang Mahkota and Teladan Prima.
Diversification Opportunities for Elang Mahkota and Teladan Prima
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Elang and Teladan is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Elang Mahkota Teknologi and Teladan Prima Agro in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Teladan Prima Agro 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 Teladan Prima. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Teladan Prima Agro has no effect on the direction of Elang Mahkota i.e., Elang Mahkota and Teladan Prima go up and down completely randomly.
Pair Corralation between Elang Mahkota and Teladan Prima
Assuming the 90 days trading horizon Elang Mahkota Teknologi is expected to generate 4.31 times more return on investment than Teladan Prima. However, Elang Mahkota is 4.31 times more volatile than Teladan Prima Agro. It trades about 0.26 of its potential returns per unit of risk. Teladan Prima Agro is currently generating about -0.09 per unit of risk. If you would invest 49,000 in Elang Mahkota Teknologi on September 12, 2024 and sell it today you would earn a total of 10,500 from holding Elang Mahkota Teknologi or generate 21.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Elang Mahkota Teknologi vs. Teladan Prima Agro
Performance |
| Timeline |
| Elang Mahkota Teknologi |
| Teladan Prima Agro |
Elang Mahkota and Teladan Prima Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Elang Mahkota and Teladan Prima
The main advantage of trading using opposite Elang Mahkota and Teladan Prima positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Elang Mahkota position performs unexpectedly, Teladan 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 Teladan Prima will offset losses from the drop in Teladan Prima's long position.| Elang Mahkota vs. Mnc Land Tbk | Elang Mahkota vs. MNC Vision Networks | Elang Mahkota vs. MD Pictures Tbk | Elang Mahkota vs. Link Net Tbk |
| Teladan Prima vs. Sumber Tani Agung | Teladan Prima vs. Wir Asia Tbk | Teladan Prima vs. Triputra Agro Persada | Teladan Prima vs. Net Visi Media |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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