Correlation Between Indosat Tbk and Elang Mahkota
Can any of the company-specific risk be diversified away by investing in both Indosat Tbk and Elang Mahkota 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 Indosat Tbk and Elang Mahkota into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Indosat Tbk and Elang Mahkota Teknologi, you can compare the effects of market volatilities on Indosat Tbk and Elang Mahkota 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 Indosat Tbk with a short position of Elang Mahkota. Check out your portfolio center. Please also check ongoing floating volatility patterns of Indosat Tbk and Elang Mahkota.
Diversification Opportunities for Indosat Tbk and Elang Mahkota
-0.86 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Indosat and Elang is -0.86. Overlapping area represents the amount of risk that can be diversified away by holding Indosat Tbk and Elang Mahkota Teknologi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elang Mahkota Teknologi and Indosat Tbk 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 Indosat Tbk are associated (or correlated) with Elang Mahkota. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Elang Mahkota Teknologi has no effect on the direction of Indosat Tbk i.e., Indosat Tbk and Elang Mahkota go up and down completely randomly.
Pair Corralation between Indosat Tbk and Elang Mahkota
Assuming the 90 days trading horizon Indosat Tbk is expected to under-perform the Elang Mahkota. In addition to that, Indosat Tbk is 1.53 times more volatile than Elang Mahkota Teknologi. It trades about -0.03 of its total potential returns per unit of risk. Elang Mahkota Teknologi is currently generating about -0.01 per unit of volatility. If you would invest 60,446 in Elang Mahkota Teknologi on August 31, 2024 and sell it today you would lose (11,846) from holding Elang Mahkota Teknologi or give up 19.6% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 99.72% |
| Values | Daily Returns |
Indosat Tbk vs. Elang Mahkota Teknologi
Performance |
| Timeline |
| Indosat Tbk |
| Elang Mahkota Teknologi |
Indosat Tbk and Elang Mahkota Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Indosat Tbk and Elang Mahkota
The main advantage of trading using opposite Indosat Tbk and Elang Mahkota positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Indosat Tbk position performs unexpectedly, Elang Mahkota 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 Elang Mahkota will offset losses from the drop in Elang Mahkota's long position.| Indosat Tbk vs. Astra Agro Lestari | Indosat Tbk vs. Vale Indonesia Tbk | Indosat Tbk vs. Timah Persero Tbk | Indosat Tbk vs. Medco Energi Internasional |
| Elang Mahkota vs. Indosat Tbk | Elang Mahkota vs. XL Axiata Tbk | Elang Mahkota vs. Energi Mega Persada | Elang Mahkota vs. Bakrie Brothers 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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