Correlation Between Optima Prima and Equity Development
Can any of the company-specific risk be diversified away by investing in both Optima Prima and Equity Development 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 Optima Prima and Equity Development into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Optima Prima Metal and Equity Development Investment, you can compare the effects of market volatilities on Optima Prima and Equity Development 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 Optima Prima with a short position of Equity Development. Check out your portfolio center. Please also check ongoing floating volatility patterns of Optima Prima and Equity Development.
Diversification Opportunities for Optima Prima and Equity Development
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Optima and Equity is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Optima Prima Metal and Equity Development Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Equity Development and Optima Prima 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 Optima Prima Metal are associated (or correlated) with Equity Development. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Equity Development has no effect on the direction of Optima Prima i.e., Optima Prima and Equity Development go up and down completely randomly.
Pair Corralation between Optima Prima and Equity Development
Assuming the 90 days trading horizon Optima Prima Metal is expected to under-perform the Equity Development. In addition to that, Optima Prima is 1.7 times more volatile than Equity Development Investment. It trades about -0.34 of its total potential returns per unit of risk. Equity Development Investment is currently generating about -0.24 per unit of volatility. If you would invest 6,400 in Equity Development Investment on August 31, 2024 and sell it today you would lose (800.00) from holding Equity Development Investment or give up 12.5% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Optima Prima Metal vs. Equity Development Investment
Performance |
| Timeline |
| Optima Prima Metal |
| Equity Development |
Optima Prima and Equity Development Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Optima Prima and Equity Development
The main advantage of trading using opposite Optima Prima and Equity Development positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Optima Prima position performs unexpectedly, Equity Development 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 Equity Development will offset losses from the drop in Equity Development's long position.| Optima Prima vs. Emdeki Utama Tbk | Optima Prima vs. Nusantara Almazia | Optima Prima vs. Sentral Mitra Informatika | Optima Prima vs. Darmi Bersaudara Tbk |
| Equity Development vs. Bank BRISyariah Tbk | Equity Development vs. Ace Hardware Indonesia | Equity Development vs. Merdeka Copper Gold | Equity Development vs. Mitra Pinasthika Mustika |
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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