Correlation Between Erajaya Swasembada and Medikaloka Hermina
Can any of the company-specific risk be diversified away by investing in both Erajaya Swasembada and Medikaloka Hermina 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 Medikaloka Hermina 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 Medikaloka Hermina PT, you can compare the effects of market volatilities on Erajaya Swasembada and Medikaloka Hermina 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 Medikaloka Hermina. Check out your portfolio center. Please also check ongoing floating volatility patterns of Erajaya Swasembada and Medikaloka Hermina.
Diversification Opportunities for Erajaya Swasembada and Medikaloka Hermina
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Erajaya and Medikaloka is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Erajaya Swasembada Tbk and Medikaloka Hermina PT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Medikaloka Hermina 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 Medikaloka Hermina. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Medikaloka Hermina has no effect on the direction of Erajaya Swasembada i.e., Erajaya Swasembada and Medikaloka Hermina go up and down completely randomly.
Pair Corralation between Erajaya Swasembada and Medikaloka Hermina
Assuming the 90 days trading horizon Erajaya Swasembada Tbk is expected to generate 1.14 times more return on investment than Medikaloka Hermina. However, Erajaya Swasembada is 1.14 times more volatile than Medikaloka Hermina PT. It trades about 0.04 of its potential returns per unit of risk. Medikaloka Hermina PT is currently generating about 0.01 per unit of risk. If you would invest 34,056 in Erajaya Swasembada Tbk on September 1, 2024 and sell it today you would earn a total of 7,544 from holding Erajaya Swasembada Tbk or generate 22.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.61% |
| Values | Daily Returns |
Erajaya Swasembada Tbk vs. Medikaloka Hermina PT
Performance |
| Timeline |
| Erajaya Swasembada Tbk |
| Medikaloka Hermina |
Erajaya Swasembada and Medikaloka Hermina Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Erajaya Swasembada and Medikaloka Hermina
The main advantage of trading using opposite Erajaya Swasembada and Medikaloka Hermina positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Erajaya Swasembada position performs unexpectedly, Medikaloka Hermina 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 Medikaloka Hermina will offset losses from the drop in Medikaloka Hermina'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 |
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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 Global Correlations module to find global opportunities by holding instruments from different markets.
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