Correlation Between Kawasan Industri and Energi Mega
Can any of the company-specific risk be diversified away by investing in both Kawasan Industri and Energi Mega 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 Kawasan Industri and Energi Mega into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kawasan Industri Jababeka and Energi Mega Persada, you can compare the effects of market volatilities on Kawasan Industri and Energi Mega 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 Kawasan Industri with a short position of Energi Mega. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kawasan Industri and Energi Mega.
Diversification Opportunities for Kawasan Industri and Energi Mega
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Kawasan and Energi is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Kawasan Industri Jababeka and Energi Mega Persada in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Energi Mega Persada and Kawasan Industri 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 Kawasan Industri Jababeka are associated (or correlated) with Energi Mega. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Energi Mega Persada has no effect on the direction of Kawasan Industri i.e., Kawasan Industri and Energi Mega go up and down completely randomly.
Pair Corralation between Kawasan Industri and Energi Mega
Assuming the 90 days trading horizon Kawasan Industri Jababeka is expected to generate 0.29 times more return on investment than Energi Mega. However, Kawasan Industri Jababeka is 3.49 times less risky than Energi Mega. It trades about 0.09 of its potential returns per unit of risk. Energi Mega Persada is currently generating about -0.06 per unit of risk. If you would invest 19,200 in Kawasan Industri Jababeka on August 29, 2024 and sell it today you would earn a total of 400.00 from holding Kawasan Industri Jababeka or generate 2.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kawasan Industri Jababeka vs. Energi Mega Persada
Performance |
| Timeline |
| Kawasan Industri Jababeka |
| Energi Mega Persada |
Kawasan Industri and Energi Mega Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kawasan Industri and Energi Mega
The main advantage of trading using opposite Kawasan Industri and Energi Mega positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kawasan Industri position performs unexpectedly, Energi Mega 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 Energi Mega will offset losses from the drop in Energi Mega's long position.| Kawasan Industri vs. Bakrieland Development Tbk | Kawasan Industri vs. Ciputra Development Tbk | Kawasan Industri vs. Sentul City Tbk | Kawasan Industri vs. Solusi Bangun Indonesia |
| Energi Mega vs. Bakrieland Development Tbk | Energi Mega vs. Bakrie Sumatera Plantations | Energi Mega vs. Bakrie Brothers Tbk | Energi Mega vs. Bumi Resources 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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