Correlation Between Erajaya Swasembada and Bintang Oto
Can any of the company-specific risk be diversified away by investing in both Erajaya Swasembada and Bintang Oto 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 Bintang Oto 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 Bintang Oto Global, you can compare the effects of market volatilities on Erajaya Swasembada and Bintang Oto 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 Bintang Oto. Check out your portfolio center. Please also check ongoing floating volatility patterns of Erajaya Swasembada and Bintang Oto.
Diversification Opportunities for Erajaya Swasembada and Bintang Oto
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between Erajaya and Bintang is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Erajaya Swasembada Tbk and Bintang Oto Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bintang Oto Global 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 Bintang Oto. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bintang Oto Global has no effect on the direction of Erajaya Swasembada i.e., Erajaya Swasembada and Bintang Oto go up and down completely randomly.
Pair Corralation between Erajaya Swasembada and Bintang Oto
Assuming the 90 days trading horizon Erajaya Swasembada Tbk is expected to under-perform the Bintang Oto. In addition to that, Erajaya Swasembada is 2.0 times more volatile than Bintang Oto Global. It trades about -0.17 of its total potential returns per unit of risk. Bintang Oto Global is currently generating about -0.23 per unit of volatility. If you would invest 57,000 in Bintang Oto Global on September 2, 2024 and sell it today you would lose (3,000) from holding Bintang Oto Global or give up 5.26% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Erajaya Swasembada Tbk vs. Bintang Oto Global
Performance |
| Timeline |
| Erajaya Swasembada Tbk |
| Bintang Oto Global |
Erajaya Swasembada and Bintang Oto Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Erajaya Swasembada and Bintang Oto
The main advantage of trading using opposite Erajaya Swasembada and Bintang Oto positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Erajaya Swasembada position performs unexpectedly, Bintang Oto 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 Bintang Oto will offset losses from the drop in Bintang Oto's long position.| Erajaya Swasembada vs. Ace Hardware Indonesia | Erajaya Swasembada vs. Japfa Comfeed Indonesia | Erajaya Swasembada vs. XL Axiata Tbk | Erajaya Swasembada vs. Pembangunan Perumahan PT |
| Bintang Oto vs. Japfa Comfeed Indonesia | Bintang Oto vs. Charoen Pokphand Indonesia | Bintang Oto vs. Erajaya Swasembada Tbk | Bintang Oto vs. Indofood Cbp Sukses |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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