Correlation Between Erajaya Swasembada and Bekasi Fajar
Can any of the company-specific risk be diversified away by investing in both Erajaya Swasembada and Bekasi Fajar 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 Erajaya Swasembada and Bekasi Fajar into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Erajaya Swasembada Tbk and Bekasi Fajar Industrial, you can compare the effects of market volatilities on Erajaya Swasembada and Bekasi Fajar 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 Erajaya Swasembada with a short position of Bekasi Fajar. Check out your portfolio center. Please also check ongoing floating volatility patterns of Erajaya Swasembada and Bekasi Fajar.
Diversification Opportunities for Erajaya Swasembada and Bekasi Fajar
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Erajaya and Bekasi is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Erajaya Swasembada Tbk and Bekasi Fajar Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bekasi Fajar Industrial and Erajaya Swasembada 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 Erajaya Swasembada Tbk are associated (or correlated) with Bekasi Fajar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bekasi Fajar Industrial has no effect on the direction of Erajaya Swasembada i.e., Erajaya Swasembada and Bekasi Fajar go up and down completely randomly.
Pair Corralation between Erajaya Swasembada and Bekasi Fajar
Assuming the 90 days trading horizon Erajaya Swasembada Tbk is expected to generate 1.04 times more return on investment than Bekasi Fajar. However, Erajaya Swasembada is 1.04 times more volatile than Bekasi Fajar Industrial. It trades about -0.07 of its potential returns per unit of risk. Bekasi Fajar Industrial is currently generating about -0.3 per unit of risk. If you would invest 43,800 in Erajaya Swasembada Tbk on August 29, 2024 and sell it today you would lose (1,800) from holding Erajaya Swasembada Tbk or give up 4.11% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Erajaya Swasembada Tbk vs. Bekasi Fajar Industrial
Performance |
| Timeline |
| Erajaya Swasembada Tbk |
| Bekasi Fajar Industrial |
Erajaya Swasembada and Bekasi Fajar Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Erajaya Swasembada and Bekasi Fajar
The main advantage of trading using opposite Erajaya Swasembada and Bekasi Fajar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Erajaya Swasembada position performs unexpectedly, Bekasi Fajar 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 Bekasi Fajar will offset losses from the drop in Bekasi Fajar's long position.| Erajaya Swasembada vs. M Cash Integrasi | Erajaya Swasembada vs. NFC Indonesia PT | Erajaya Swasembada vs. Multipolar Technology Tbk | Erajaya Swasembada vs. Digital Mediatama Maxima |
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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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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