Correlation Between PT Indofood and Era Media
Can any of the company-specific risk be diversified away by investing in both PT Indofood and Era Media 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 PT Indofood and Era Media into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PT Indofood Sukses and Era Media Sejahtera, you can compare the effects of market volatilities on PT Indofood and Era Media 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 PT Indofood with a short position of Era Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of PT Indofood and Era Media.
Diversification Opportunities for PT Indofood and Era Media
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between INDF and Era is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding PT Indofood Sukses and Era Media Sejahtera in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Era Media Sejahtera and PT Indofood 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 PT Indofood Sukses are associated (or correlated) with Era Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Era Media Sejahtera has no effect on the direction of PT Indofood i.e., PT Indofood and Era Media go up and down completely randomly.
Pair Corralation between PT Indofood and Era Media
Assuming the 90 days trading horizon PT Indofood Sukses is expected to generate 1.17 times more return on investment than Era Media. However, PT Indofood is 1.17 times more volatile than Era Media Sejahtera. It trades about 0.1 of its potential returns per unit of risk. Era Media Sejahtera is currently generating about -0.05 per unit of risk. If you would invest 730,000 in PT Indofood Sukses on September 2, 2024 and sell it today you would earn a total of 25,000 from holding PT Indofood Sukses or generate 3.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
PT Indofood Sukses vs. Era Media Sejahtera
Performance |
| Timeline |
| PT Indofood Sukses |
| Era Media Sejahtera |
PT Indofood and Era Media Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PT Indofood and Era Media
The main advantage of trading using opposite PT Indofood and Era Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PT Indofood position performs unexpectedly, Era Media 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 Era Media will offset losses from the drop in Era Media's long position.| PT Indofood vs. Astra International Tbk | PT Indofood vs. Unilever Indonesia Tbk | PT Indofood vs. Telkom Indonesia Tbk | PT Indofood vs. Bank Mandiri Persero |
| Era Media vs. Bank Central Asia | Era Media vs. Bank Rakyat Indonesia | Era Media vs. Bayan Resources Tbk | Era Media vs. Bank Mandiri Persero |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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