Correlation Between Enseval Putra and Victoria Insurance
Can any of the company-specific risk be diversified away by investing in both Enseval Putra and Victoria Insurance 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 Victoria Insurance 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 Victoria Insurance Tbk, you can compare the effects of market volatilities on Enseval Putra and Victoria Insurance 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 Victoria Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Enseval Putra and Victoria Insurance.
Diversification Opportunities for Enseval Putra and Victoria Insurance
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Enseval and Victoria is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Enseval Putra Megatrading and Victoria Insurance Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Victoria Insurance Tbk 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 Victoria Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Victoria Insurance Tbk has no effect on the direction of Enseval Putra i.e., Enseval Putra and Victoria Insurance go up and down completely randomly.
Pair Corralation between Enseval Putra and Victoria Insurance
Assuming the 90 days trading horizon Enseval Putra Megatrading is expected to generate 0.47 times more return on investment than Victoria Insurance. However, Enseval Putra Megatrading is 2.12 times less risky than Victoria Insurance. It trades about -0.11 of its potential returns per unit of risk. Victoria Insurance Tbk is currently generating about -0.16 per unit of risk. If you would invest 250,000 in Enseval Putra Megatrading on August 30, 2024 and sell it today you would lose (11,000) from holding Enseval Putra Megatrading or give up 4.4% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Enseval Putra Megatrading vs. Victoria Insurance Tbk
Performance |
| Timeline |
| Enseval Putra Megatrading |
| Victoria Insurance Tbk |
Enseval Putra and Victoria Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Enseval Putra and Victoria Insurance
The main advantage of trading using opposite Enseval Putra and Victoria Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Enseval Putra position performs unexpectedly, Victoria Insurance 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 Victoria Insurance will offset losses from the drop in Victoria Insurance's long position.The idea behind Enseval Putra Megatrading and Victoria Insurance Tbk pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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