Correlation Between Energi Mega and Berlian Laju
Can any of the company-specific risk be diversified away by investing in both Energi Mega and Berlian Laju 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 Energi Mega and Berlian Laju into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Energi Mega Persada and Berlian Laju Tanker, you can compare the effects of market volatilities on Energi Mega and Berlian Laju 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 Energi Mega with a short position of Berlian Laju. Check out your portfolio center. Please also check ongoing floating volatility patterns of Energi Mega and Berlian Laju.
Diversification Opportunities for Energi Mega and Berlian Laju
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Energi and Berlian is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Energi Mega Persada and Berlian Laju Tanker in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Berlian Laju Tanker and Energi Mega 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 Energi Mega Persada are associated (or correlated) with Berlian Laju. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Berlian Laju Tanker has no effect on the direction of Energi Mega i.e., Energi Mega and Berlian Laju go up and down completely randomly.
Pair Corralation between Energi Mega and Berlian Laju
Assuming the 90 days trading horizon Energi Mega is expected to generate 1.12 times less return on investment than Berlian Laju. But when comparing it to its historical volatility, Energi Mega Persada is 1.28 times less risky than Berlian Laju. It trades about 0.1 of its potential returns per unit of risk. Berlian Laju Tanker is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 2,100 in Berlian Laju Tanker on October 26, 2024 and sell it today you would earn a total of 100.00 from holding Berlian Laju Tanker or generate 4.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Energi Mega Persada vs. Berlian Laju Tanker
Performance |
| Timeline |
| Energi Mega Persada |
| Berlian Laju Tanker |
Energi Mega and Berlian Laju Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Energi Mega and Berlian Laju
The main advantage of trading using opposite Energi Mega and Berlian Laju positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Energi Mega position performs unexpectedly, Berlian Laju 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 Berlian Laju will offset losses from the drop in Berlian Laju's long position.| Energi Mega vs. Bakrieland Development Tbk | Energi Mega vs. Bakrie Sumatera Plantations | Energi Mega vs. Bakrie Brothers Tbk | Energi Mega vs. Bumi Resources Tbk |
| Berlian Laju vs. Bakrie Brothers Tbk | Berlian Laju vs. Bakrie Sumatera Plantations | Berlian Laju vs. Bakrieland Development Tbk | Berlian Laju vs. Energi Mega Persada |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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