Correlation Between Erajaya Swasembada and Enseval Putra
Can any of the company-specific risk be diversified away by investing in both Erajaya Swasembada and Enseval Putra 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 Enseval Putra 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 Enseval Putra Megatrading, you can compare the effects of market volatilities on Erajaya Swasembada and Enseval Putra 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 Enseval Putra. Check out your portfolio center. Please also check ongoing floating volatility patterns of Erajaya Swasembada and Enseval Putra.
Diversification Opportunities for Erajaya Swasembada and Enseval Putra
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Erajaya and Enseval is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Erajaya Swasembada Tbk and Enseval Putra Megatrading in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enseval Putra Megatrading 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 Enseval Putra. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enseval Putra Megatrading has no effect on the direction of Erajaya Swasembada i.e., Erajaya Swasembada and Enseval Putra go up and down completely randomly.
Pair Corralation between Erajaya Swasembada and Enseval Putra
Assuming the 90 days trading horizon Erajaya Swasembada Tbk is expected to generate 6.39 times more return on investment than Enseval Putra. However, Erajaya Swasembada is 6.39 times more volatile than Enseval Putra Megatrading. It trades about 0.02 of its potential returns per unit of risk. Enseval Putra Megatrading is currently generating about -0.41 per unit of risk. If you would invest 38,000 in Erajaya Swasembada Tbk on November 29, 2024 and sell it today you would earn a total of 0.00 from holding Erajaya Swasembada Tbk or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Erajaya Swasembada Tbk vs. Enseval Putra Megatrading
Performance |
| Timeline |
| Erajaya Swasembada Tbk |
| Enseval Putra Megatrading |
Erajaya Swasembada and Enseval Putra Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Erajaya Swasembada and Enseval Putra
The main advantage of trading using opposite Erajaya Swasembada and Enseval Putra positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Erajaya Swasembada position performs unexpectedly, Enseval Putra 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 Enseval Putra will offset losses from the drop in Enseval Putra'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 |
| Enseval Putra vs. Astra Graphia Tbk | Enseval Putra vs. Hexindo Adiperkasa Tbk | Enseval Putra vs. Lautan Luas Tbk | Enseval Putra vs. Citra Marga Nusaphala |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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