Correlation Between Era Mandiri and Surya Permata
Can any of the company-specific risk be diversified away by investing in both Era Mandiri and Surya Permata 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 Era Mandiri and Surya Permata into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Era Mandiri Cemerlang and Surya Permata Andalan, you can compare the effects of market volatilities on Era Mandiri and Surya Permata 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 Era Mandiri with a short position of Surya Permata. Check out your portfolio center. Please also check ongoing floating volatility patterns of Era Mandiri and Surya Permata.
Diversification Opportunities for Era Mandiri and Surya Permata
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Era and Surya is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Era Mandiri Cemerlang and Surya Permata Andalan in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Surya Permata Andalan and Era Mandiri 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 Era Mandiri Cemerlang are associated (or correlated) with Surya Permata. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Surya Permata Andalan has no effect on the direction of Era Mandiri i.e., Era Mandiri and Surya Permata go up and down completely randomly.
Pair Corralation between Era Mandiri and Surya Permata
Assuming the 90 days trading horizon Era Mandiri Cemerlang is expected to generate 0.91 times more return on investment than Surya Permata. However, Era Mandiri Cemerlang is 1.1 times less risky than Surya Permata. It trades about -0.03 of its potential returns per unit of risk. Surya Permata Andalan is currently generating about -0.05 per unit of risk. If you would invest 6,000 in Era Mandiri Cemerlang on September 4, 2024 and sell it today you would lose (3,400) from holding Era Mandiri Cemerlang or give up 56.67% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.79% |
| Values | Daily Returns |
Era Mandiri Cemerlang vs. Surya Permata Andalan
Performance |
| Timeline |
| Era Mandiri Cemerlang |
| Surya Permata Andalan |
Era Mandiri and Surya Permata Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Era Mandiri and Surya Permata
The main advantage of trading using opposite Era Mandiri and Surya Permata positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Era Mandiri position performs unexpectedly, Surya Permata 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 Surya Permata will offset losses from the drop in Surya Permata's long position.| Era Mandiri vs. Dharma Satya Nusantara | Era Mandiri vs. Saratoga Investama Sedaya | Era Mandiri vs. Surya Esa Perkasa | Era Mandiri vs. Elang Mahkota Teknologi |
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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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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