Correlation Between Enseval Putra and Steel Pipe
Can any of the company-specific risk be diversified away by investing in both Enseval Putra and Steel Pipe 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 Enseval Putra and Steel Pipe into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Enseval Putra Megatrading and Steel Pipe Industry, you can compare the effects of market volatilities on Enseval Putra and Steel Pipe 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 Enseval Putra with a short position of Steel Pipe. Check out your portfolio center. Please also check ongoing floating volatility patterns of Enseval Putra and Steel Pipe.
Diversification Opportunities for Enseval Putra and Steel Pipe
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Enseval and Steel is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Enseval Putra Megatrading and Steel Pipe Industry in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Steel Pipe Industry and Enseval Putra 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 Enseval Putra Megatrading are associated (or correlated) with Steel Pipe. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Steel Pipe Industry has no effect on the direction of Enseval Putra i.e., Enseval Putra and Steel Pipe go up and down completely randomly.
Pair Corralation between Enseval Putra and Steel Pipe
Assuming the 90 days trading horizon Enseval Putra is expected to generate 1.39 times less return on investment than Steel Pipe. But when comparing it to its historical volatility, Enseval Putra Megatrading is 1.73 times less risky than Steel Pipe. It trades about 0.06 of its potential returns per unit of risk. Steel Pipe Industry is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 26,591 in Steel Pipe Industry on August 29, 2024 and sell it today you would earn a total of 1,809 from holding Steel Pipe Industry or generate 6.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Enseval Putra Megatrading vs. Steel Pipe Industry
Performance |
| Timeline |
| Enseval Putra Megatrading |
| Steel Pipe Industry |
Enseval Putra and Steel Pipe Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Enseval Putra and Steel Pipe
The main advantage of trading using opposite Enseval Putra and Steel Pipe positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Enseval Putra position performs unexpectedly, Steel Pipe 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 Steel Pipe will offset losses from the drop in Steel Pipe's long position.| Enseval Putra vs. Astra Graphia Tbk | Enseval Putra vs. Hexindo Adiperkasa Tbk | Enseval Putra vs. Lautan Luas Tbk | Enseval Putra vs. Citra Marga Nusaphala |
| Steel Pipe vs. Barito Pacific Tbk | Steel Pipe vs. Charoen Pokphand Indonesia | Steel Pipe vs. Indocement Tunggal Prakarsa |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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