Correlation Between Eratex Djaja and Multifiling Mitra
Can any of the company-specific risk be diversified away by investing in both Eratex Djaja and Multifiling Mitra 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 Multifiling Mitra 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 Multifiling Mitra Indonesia, you can compare the effects of market volatilities on Eratex Djaja and Multifiling Mitra 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 Multifiling Mitra. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eratex Djaja and Multifiling Mitra.
Diversification Opportunities for Eratex Djaja and Multifiling Mitra
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Eratex and Multifiling is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Eratex Djaja Tbk and Multifiling Mitra Indonesia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Multifiling Mitra 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 Multifiling Mitra. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Multifiling Mitra has no effect on the direction of Eratex Djaja i.e., Eratex Djaja and Multifiling Mitra go up and down completely randomly.
Pair Corralation between Eratex Djaja and Multifiling Mitra
Assuming the 90 days trading horizon Eratex Djaja Tbk is expected to generate 4.05 times more return on investment than Multifiling Mitra. However, Eratex Djaja is 4.05 times more volatile than Multifiling Mitra Indonesia. It trades about 0.13 of its potential returns per unit of risk. Multifiling Mitra Indonesia is currently generating about 0.1 per unit of risk. If you would invest 9,000 in Eratex Djaja Tbk on August 30, 2024 and sell it today you would earn a total of 1,800 from holding Eratex Djaja Tbk or generate 20.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Eratex Djaja Tbk vs. Multifiling Mitra Indonesia
Performance |
| Timeline |
| Eratex Djaja Tbk |
| Multifiling Mitra |
Eratex Djaja and Multifiling Mitra Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eratex Djaja and Multifiling Mitra
The main advantage of trading using opposite Eratex Djaja and Multifiling Mitra positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eratex Djaja position performs unexpectedly, Multifiling Mitra 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 Multifiling Mitra will offset losses from the drop in Multifiling Mitra's long position.| Eratex Djaja vs. Pembangunan Jaya Ancol | Eratex Djaja vs. Panorama Sentrawisata Tbk | Eratex Djaja vs. Millennium Pharmacon International | Eratex Djaja vs. Tempo Inti Media |
| Multifiling Mitra vs. Midi Utama Indonesia | Multifiling Mitra vs. Jasuindo Tiga Perkasa | Multifiling Mitra vs. Multi Indocitra Tbk | Multifiling Mitra vs. Kokoh Inti Arebama |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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