Correlation Between Eratex Djaja and Argo Pantes
Can any of the company-specific risk be diversified away by investing in both Eratex Djaja and Argo Pantes 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 Eratex Djaja and Argo Pantes into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eratex Djaja Tbk and Argo Pantes Tbk, you can compare the effects of market volatilities on Eratex Djaja and Argo Pantes 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 Eratex Djaja with a short position of Argo Pantes. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eratex Djaja and Argo Pantes.
Diversification Opportunities for Eratex Djaja and Argo Pantes
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Eratex and Argo is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Eratex Djaja Tbk and Argo Pantes Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Argo Pantes Tbk and Eratex Djaja 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 Eratex Djaja Tbk are associated (or correlated) with Argo Pantes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Argo Pantes Tbk has no effect on the direction of Eratex Djaja i.e., Eratex Djaja and Argo Pantes go up and down completely randomly.
Pair Corralation between Eratex Djaja and Argo Pantes
Assuming the 90 days trading horizon Eratex Djaja Tbk is expected to generate 3.33 times more return on investment than Argo Pantes. However, Eratex Djaja is 3.33 times more volatile than Argo Pantes Tbk. It trades about 0.12 of its potential returns per unit of risk. Argo Pantes Tbk is currently generating about -0.19 per unit of risk. If you would invest 9,200 in Eratex Djaja Tbk on August 29, 2024 and sell it today you would earn a total of 1,600 from holding Eratex Djaja Tbk or generate 17.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Eratex Djaja Tbk vs. Argo Pantes Tbk
Performance |
| Timeline |
| Eratex Djaja Tbk |
| Argo Pantes Tbk |
Eratex Djaja and Argo Pantes Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eratex Djaja and Argo Pantes
The main advantage of trading using opposite Eratex Djaja and Argo Pantes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eratex Djaja position performs unexpectedly, Argo Pantes 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 Argo Pantes will offset losses from the drop in Argo Pantes' long position.| Eratex Djaja vs. Ever Shine Textile | Eratex Djaja vs. PT Century Textile | Eratex Djaja vs. Argo Pantes Tbk | Eratex Djaja vs. Primarindo Asia Infrastructure |
| Argo Pantes vs. Sepatu Bata Tbk | Argo Pantes vs. Ever Shine Textile | Argo Pantes vs. Eratex Djaja Tbk | Argo Pantes vs. PT Century Textile |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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