Correlation Between Eratex Djaja and Indorama Synthetics
Can any of the company-specific risk be diversified away by investing in both Eratex Djaja and Indorama Synthetics 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 Indorama Synthetics 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 Indorama Synthetics Tbk, you can compare the effects of market volatilities on Eratex Djaja and Indorama Synthetics 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 Indorama Synthetics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eratex Djaja and Indorama Synthetics.
Diversification Opportunities for Eratex Djaja and Indorama Synthetics
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Eratex and Indorama is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Eratex Djaja Tbk and Indorama Synthetics Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Indorama Synthetics 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 Indorama Synthetics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Indorama Synthetics Tbk has no effect on the direction of Eratex Djaja i.e., Eratex Djaja and Indorama Synthetics go up and down completely randomly.
Pair Corralation between Eratex Djaja and Indorama Synthetics
Assuming the 90 days trading horizon Eratex Djaja Tbk is expected to under-perform the Indorama Synthetics. In addition to that, Eratex Djaja is 1.95 times more volatile than Indorama Synthetics Tbk. It trades about -0.12 of its total potential returns per unit of risk. Indorama Synthetics Tbk is currently generating about -0.02 per unit of volatility. If you would invest 310,000 in Indorama Synthetics Tbk on August 25, 2024 and sell it today you would lose (48,000) from holding Indorama Synthetics Tbk or give up 15.48% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Eratex Djaja Tbk vs. Indorama Synthetics Tbk
Performance |
| Timeline |
| Eratex Djaja Tbk |
| Indorama Synthetics Tbk |
Eratex Djaja and Indorama Synthetics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eratex Djaja and Indorama Synthetics
The main advantage of trading using opposite Eratex Djaja and Indorama Synthetics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eratex Djaja position performs unexpectedly, Indorama Synthetics 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 Indorama Synthetics will offset losses from the drop in Indorama Synthetics' 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 |
| Indorama Synthetics vs. Indospring Tbk | Indorama Synthetics vs. Indomobil Sukses Internasional | Indorama Synthetics vs. Sumi Indo Kabel | Indorama Synthetics vs. Goodyear Indonesia 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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