Correlation Between Erajaya Swasembada and Wismilak Inti
Can any of the company-specific risk be diversified away by investing in both Erajaya Swasembada and Wismilak Inti 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 Wismilak Inti 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 Wismilak Inti Makmur, you can compare the effects of market volatilities on Erajaya Swasembada and Wismilak Inti 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 Wismilak Inti. Check out your portfolio center. Please also check ongoing floating volatility patterns of Erajaya Swasembada and Wismilak Inti.
Diversification Opportunities for Erajaya Swasembada and Wismilak Inti
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Erajaya and Wismilak is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Erajaya Swasembada Tbk and Wismilak Inti Makmur in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wismilak Inti Makmur 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 Wismilak Inti. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wismilak Inti Makmur has no effect on the direction of Erajaya Swasembada i.e., Erajaya Swasembada and Wismilak Inti go up and down completely randomly.
Pair Corralation between Erajaya Swasembada and Wismilak Inti
Assuming the 90 days trading horizon Erajaya Swasembada Tbk is expected to generate 0.68 times more return on investment than Wismilak Inti. However, Erajaya Swasembada Tbk is 1.46 times less risky than Wismilak Inti. It trades about 0.0 of its potential returns per unit of risk. Wismilak Inti Makmur is currently generating about -0.01 per unit of risk. If you would invest 46,444 in Erajaya Swasembada Tbk on August 31, 2024 and sell it today you would lose (4,844) from holding Erajaya Swasembada Tbk or give up 10.43% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.72% |
| Values | Daily Returns |
Erajaya Swasembada Tbk vs. Wismilak Inti Makmur
Performance |
| Timeline |
| Erajaya Swasembada Tbk |
| Wismilak Inti Makmur |
Erajaya Swasembada and Wismilak Inti Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Erajaya Swasembada and Wismilak Inti
The main advantage of trading using opposite Erajaya Swasembada and Wismilak Inti positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Erajaya Swasembada position performs unexpectedly, Wismilak Inti 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 Wismilak Inti will offset losses from the drop in Wismilak Inti's long position.| Erajaya Swasembada vs. Multipolar Tbk | Erajaya Swasembada vs. Astra Graphia Tbk | Erajaya Swasembada vs. Matahari Putra Prima | Erajaya Swasembada vs. Ramayana Lestari Sentosa |
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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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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