Correlation Between Link Net and Elang Mahkota
Can any of the company-specific risk be diversified away by investing in both Link Net 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 Link Net and Elang Mahkota into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Link Net Tbk and Elang Mahkota Teknologi, you can compare the effects of market volatilities on Link Net 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 Link Net with a short position of Elang Mahkota. Check out your portfolio center. Please also check ongoing floating volatility patterns of Link Net and Elang Mahkota.
Diversification Opportunities for Link Net and Elang Mahkota
-0.82 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Link and Elang is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding Link Net 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 Link Net 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 Link Net 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 Link Net i.e., Link Net and Elang Mahkota go up and down completely randomly.
Pair Corralation between Link Net and Elang Mahkota
Assuming the 90 days trading horizon Link Net Tbk is expected to under-perform the Elang Mahkota. In addition to that, Link Net is 1.06 times more volatile than Elang Mahkota Teknologi. It trades about -0.22 of its total potential returns per unit of risk. Elang Mahkota Teknologi is currently generating about 0.11 per unit of volatility. If you would invest 41,200 in Elang Mahkota Teknologi on August 28, 2024 and sell it today you would earn a total of 7,000 from holding Elang Mahkota Teknologi or generate 16.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Link Net Tbk vs. Elang Mahkota Teknologi
Performance |
| Timeline |
| Link Net Tbk |
| Elang Mahkota Teknologi |
Link Net and Elang Mahkota Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Link Net and Elang Mahkota
The main advantage of trading using opposite Link Net and Elang Mahkota positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Link Net 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.The idea behind Link Net Tbk and Elang Mahkota Teknologi pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Elang Mahkota vs. Mnc Land Tbk | Elang Mahkota vs. MNC Vision Networks | Elang Mahkota vs. Medikaloka Hermina PT |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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