Correlation Between Merck Tbk and Enseval Putra
Can any of the company-specific risk be diversified away by investing in both Merck Tbk and Enseval Putra 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 Merck Tbk and Enseval Putra into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Merck Tbk and Enseval Putra Megatrading, you can compare the effects of market volatilities on Merck Tbk and Enseval Putra 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 Merck Tbk with a short position of Enseval Putra. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merck Tbk and Enseval Putra.
Diversification Opportunities for Merck Tbk and Enseval Putra
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Merck and Enseval is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Merck Tbk and Enseval Putra Megatrading in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enseval Putra Megatrading and Merck 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 Merck Tbk are associated (or correlated) with Enseval Putra. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enseval Putra Megatrading has no effect on the direction of Merck Tbk i.e., Merck Tbk and Enseval Putra go up and down completely randomly.
Pair Corralation between Merck Tbk and Enseval Putra
Assuming the 90 days trading horizon Merck Tbk is expected to under-perform the Enseval Putra. But the stock apears to be less risky and, when comparing its historical volatility, Merck Tbk is 1.4 times less risky than Enseval Putra. The stock trades about -0.05 of its potential returns per unit of risk. The Enseval Putra Megatrading is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 233,581 in Enseval Putra Megatrading on August 29, 2024 and sell it today you would earn a total of 7,419 from holding Enseval Putra Megatrading or generate 3.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Merck Tbk vs. Enseval Putra Megatrading
Performance |
| Timeline |
| Merck Tbk |
| Enseval Putra Megatrading |
Merck Tbk and Enseval Putra Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merck Tbk and Enseval Putra
The main advantage of trading using opposite Merck Tbk and Enseval Putra positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merck Tbk position performs unexpectedly, Enseval Putra 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 Enseval Putra will offset losses from the drop in Enseval Putra's long position.| Merck Tbk vs. Merdeka Copper Gold | Merck Tbk vs. Tower Bersama Infrastructure | Merck Tbk vs. Erajaya Swasembada Tbk | Merck Tbk vs. Surya Citra Media |
| Enseval Putra vs. Astra Graphia Tbk | Enseval Putra vs. Hexindo Adiperkasa Tbk | Enseval Putra vs. Lautan Luas Tbk | Enseval Putra vs. Citra Marga Nusaphala |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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