Correlation Between Eratex Djaja and Trans Power
Can any of the company-specific risk be diversified away by investing in both Eratex Djaja and Trans Power 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 Trans Power 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 Trans Power Marine, you can compare the effects of market volatilities on Eratex Djaja and Trans Power 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 Trans Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eratex Djaja and Trans Power.
Diversification Opportunities for Eratex Djaja and Trans Power
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Eratex and Trans is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Eratex Djaja Tbk and Trans Power Marine in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trans Power Marine 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 Trans Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trans Power Marine has no effect on the direction of Eratex Djaja i.e., Eratex Djaja and Trans Power go up and down completely randomly.
Pair Corralation between Eratex Djaja and Trans Power
Assuming the 90 days trading horizon Eratex Djaja Tbk is expected to generate 7.96 times more return on investment than Trans Power. However, Eratex Djaja is 7.96 times more volatile than Trans Power Marine. It trades about 0.13 of its potential returns per unit of risk. Trans Power Marine is currently generating about -0.58 per unit of risk. If you would invest 8,900 in Eratex Djaja Tbk on August 31, 2024 and sell it today you would earn a total of 1,700 from holding Eratex Djaja Tbk or generate 19.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Eratex Djaja Tbk vs. Trans Power Marine
Performance |
| Timeline |
| Eratex Djaja Tbk |
| Trans Power Marine |
Eratex Djaja and Trans Power Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eratex Djaja and Trans Power
The main advantage of trading using opposite Eratex Djaja and Trans Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eratex Djaja position performs unexpectedly, Trans Power 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 Trans Power will offset losses from the drop in Trans Power's long position.| Eratex Djaja vs. Japfa Comfeed Indonesia | Eratex Djaja vs. Charoen Pokphand Indonesia | Eratex Djaja vs. Erajaya Swasembada Tbk | Eratex Djaja vs. Indofood Cbp Sukses |
| Trans Power vs. Pelayaran Nelly Dwi | Trans Power vs. Wintermar Offshore Marine | Trans Power vs. Pelita Samudera Shipping | Trans Power vs. Samudera 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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