Correlation Between Energi Mega and XL Axiata
Can any of the company-specific risk be diversified away by investing in both Energi Mega and XL Axiata 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 XL Axiata 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 XL Axiata Tbk, you can compare the effects of market volatilities on Energi Mega and XL Axiata 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 XL Axiata. Check out your portfolio center. Please also check ongoing floating volatility patterns of Energi Mega and XL Axiata.
Diversification Opportunities for Energi Mega and XL Axiata
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Energi and EXCL is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Energi Mega Persada and XL Axiata Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on XL Axiata Tbk 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 XL Axiata. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of XL Axiata Tbk has no effect on the direction of Energi Mega i.e., Energi Mega and XL Axiata go up and down completely randomly.
Pair Corralation between Energi Mega and XL Axiata
Assuming the 90 days trading horizon Energi Mega Persada is expected to generate 3.14 times more return on investment than XL Axiata. However, Energi Mega is 3.14 times more volatile than XL Axiata Tbk. It trades about 0.09 of its potential returns per unit of risk. XL Axiata Tbk is currently generating about -0.02 per unit of risk. If you would invest 20,000 in Energi Mega Persada on September 2, 2024 and sell it today you would earn a total of 4,200 from holding Energi Mega Persada or generate 21.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Energi Mega Persada vs. XL Axiata Tbk
Performance |
| Timeline |
| Energi Mega Persada |
| XL Axiata Tbk |
Energi Mega and XL Axiata Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Energi Mega and XL Axiata
The main advantage of trading using opposite Energi Mega and XL Axiata positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Energi Mega position performs unexpectedly, XL Axiata 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 XL Axiata will offset losses from the drop in XL Axiata's long position.| Energi Mega vs. Mitrabahtera Segara Sejati | Energi Mega vs. Weha Transportasi Indonesia | Energi Mega vs. Rig Tenders Tbk |
| XL Axiata vs. Indosat Tbk | XL Axiata vs. Jasa Marga Tbk | XL Axiata vs. Indocement Tunggal Prakarsa | XL Axiata vs. Semen Indonesia Persero |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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