Correlation Between Eratex Djaja and Buana Listya
Can any of the company-specific risk be diversified away by investing in both Eratex Djaja and Buana Listya 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 Buana Listya 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 Buana Listya Tama, you can compare the effects of market volatilities on Eratex Djaja and Buana Listya 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 Buana Listya. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eratex Djaja and Buana Listya.
Diversification Opportunities for Eratex Djaja and Buana Listya
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Eratex and Buana is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Eratex Djaja Tbk and Buana Listya Tama in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Buana Listya Tama 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 Buana Listya. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Buana Listya Tama has no effect on the direction of Eratex Djaja i.e., Eratex Djaja and Buana Listya go up and down completely randomly.
Pair Corralation between Eratex Djaja and Buana Listya
Assuming the 90 days trading horizon Eratex Djaja Tbk is expected to under-perform the Buana Listya. In addition to that, Eratex Djaja is 1.03 times more volatile than Buana Listya Tama. It trades about -0.1 of its total potential returns per unit of risk. Buana Listya Tama is currently generating about 0.03 per unit of volatility. If you would invest 9,900 in Buana Listya Tama on August 29, 2024 and sell it today you would earn a total of 1,200 from holding Buana Listya Tama or generate 12.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Eratex Djaja Tbk vs. Buana Listya Tama
Performance |
| Timeline |
| Eratex Djaja Tbk |
| Buana Listya Tama |
Eratex Djaja and Buana Listya Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eratex Djaja and Buana Listya
The main advantage of trading using opposite Eratex Djaja and Buana Listya positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eratex Djaja position performs unexpectedly, Buana Listya 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 Buana Listya will offset losses from the drop in Buana Listya's 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 |
| Buana Listya vs. City Retail Developments | Buana Listya vs. PT Homeco Victoria | Buana Listya vs. Weha Transportasi Indonesia | Buana Listya vs. First Media Tbk |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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