Correlation Between Elang Mahkota and Bakrie Sumatera
Can any of the company-specific risk be diversified away by investing in both Elang Mahkota and Bakrie Sumatera 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 Bakrie Sumatera 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 Bakrie Sumatera Plantations, you can compare the effects of market volatilities on Elang Mahkota and Bakrie Sumatera 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 Bakrie Sumatera. Check out your portfolio center. Please also check ongoing floating volatility patterns of Elang Mahkota and Bakrie Sumatera.
Diversification Opportunities for Elang Mahkota and Bakrie Sumatera
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Elang and Bakrie is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Elang Mahkota Teknologi and Bakrie Sumatera Plantations in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bakrie Sumatera Plan 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 Bakrie Sumatera. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bakrie Sumatera Plan has no effect on the direction of Elang Mahkota i.e., Elang Mahkota and Bakrie Sumatera go up and down completely randomly.
Pair Corralation between Elang Mahkota and Bakrie Sumatera
Assuming the 90 days trading horizon Elang Mahkota Teknologi is expected to under-perform the Bakrie Sumatera. In addition to that, Elang Mahkota is 1.42 times more volatile than Bakrie Sumatera Plantations. It trades about -0.01 of its total potential returns per unit of risk. Bakrie Sumatera Plantations is currently generating about 0.03 per unit of volatility. If you would invest 10,200 in Bakrie Sumatera Plantations on September 1, 2024 and sell it today you would earn a total of 1,500 from holding Bakrie Sumatera Plantations or generate 14.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.44% |
| Values | Daily Returns |
Elang Mahkota Teknologi vs. Bakrie Sumatera Plantations
Performance |
| Timeline |
| Elang Mahkota Teknologi |
| Bakrie Sumatera Plan |
Elang Mahkota and Bakrie Sumatera Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Elang Mahkota and Bakrie Sumatera
The main advantage of trading using opposite Elang Mahkota and Bakrie Sumatera positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Elang Mahkota position performs unexpectedly, Bakrie Sumatera 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 Bakrie Sumatera will offset losses from the drop in Bakrie Sumatera'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 |
| Bakrie Sumatera vs. Bank BRISyariah Tbk | Bakrie Sumatera vs. Mitra Pinasthika Mustika | Bakrie Sumatera vs. Jakarta Int Hotels | Bakrie Sumatera vs. Indosterling Technomedia 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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