Correlation Between Era Mandiri and Terregra Asia
Can any of the company-specific risk be diversified away by investing in both Era Mandiri and Terregra Asia 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 Terregra Asia 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 Terregra Asia Energy, you can compare the effects of market volatilities on Era Mandiri and Terregra Asia 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 Terregra Asia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Era Mandiri and Terregra Asia.
Diversification Opportunities for Era Mandiri and Terregra Asia
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Era and Terregra is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Era Mandiri Cemerlang and Terregra Asia Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Terregra Asia Energy 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 Terregra Asia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Terregra Asia Energy has no effect on the direction of Era Mandiri i.e., Era Mandiri and Terregra Asia go up and down completely randomly.
Pair Corralation between Era Mandiri and Terregra Asia
Assuming the 90 days trading horizon Era Mandiri Cemerlang is expected to under-perform the Terregra Asia. But the stock apears to be less risky and, when comparing its historical volatility, Era Mandiri Cemerlang is 1.28 times less risky than Terregra Asia. The stock trades about -0.19 of its potential returns per unit of risk. The Terregra Asia Energy is currently generating about -0.13 of returns per unit of risk over similar time horizon. If you would invest 2,900 in Terregra Asia Energy on September 12, 2024 and sell it today you would lose (900.00) from holding Terregra Asia Energy or give up 31.03% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Era Mandiri Cemerlang vs. Terregra Asia Energy
Performance |
| Timeline |
| Era Mandiri Cemerlang |
| Terregra Asia Energy |
Era Mandiri and Terregra Asia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Era Mandiri and Terregra Asia
The main advantage of trading using opposite Era Mandiri and Terregra Asia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Era Mandiri position performs unexpectedly, Terregra Asia 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 Terregra Asia will offset losses from the drop in Terregra Asia's long position.| Era Mandiri vs. Putra Rajawali Kencana | Era Mandiri vs. Sinergi Inti Plastindo | Era Mandiri vs. Karya Bersama Anugerah | Era Mandiri vs. Jasnita Telekomindo Tbk |
| Terregra Asia vs. Kapuas Prima Coal | Terregra Asia vs. Cikarang Listrindo Tbk | Terregra Asia vs. PP Presisi Tbk | Terregra Asia vs. Alfa Energi Investama |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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