Correlation Between BANK MANDIRI and EMPEROR ENT
Can any of the company-specific risk be diversified away by investing in both BANK MANDIRI and EMPEROR ENT 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 BANK MANDIRI and EMPEROR ENT into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BANK MANDIRI and EMPEROR ENT HOTEL, you can compare the effects of market volatilities on BANK MANDIRI and EMPEROR ENT 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 BANK MANDIRI with a short position of EMPEROR ENT. Check out your portfolio center. Please also check ongoing floating volatility patterns of BANK MANDIRI and EMPEROR ENT.
Diversification Opportunities for BANK MANDIRI and EMPEROR ENT
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between BANK and EMPEROR is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding BANK MANDIRI and EMPEROR ENT HOTEL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EMPEROR ENT HOTEL and BANK MANDIRI 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 BANK MANDIRI are associated (or correlated) with EMPEROR ENT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EMPEROR ENT HOTEL has no effect on the direction of BANK MANDIRI i.e., BANK MANDIRI and EMPEROR ENT go up and down completely randomly.
Pair Corralation between BANK MANDIRI and EMPEROR ENT
Assuming the 90 days trading horizon BANK MANDIRI is expected to generate 7.21 times less return on investment than EMPEROR ENT. In addition to that, BANK MANDIRI is 2.6 times more volatile than EMPEROR ENT HOTEL. It trades about 0.01 of its total potential returns per unit of risk. EMPEROR ENT HOTEL is currently generating about 0.25 per unit of volatility. If you would invest 3.35 in EMPEROR ENT HOTEL on October 12, 2024 and sell it today you would earn a total of 0.15 from holding EMPEROR ENT HOTEL or generate 4.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BANK MANDIRI vs. EMPEROR ENT HOTEL
Performance |
| Timeline |
| BANK MANDIRI |
| EMPEROR ENT HOTEL |
BANK MANDIRI and EMPEROR ENT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BANK MANDIRI and EMPEROR ENT
The main advantage of trading using opposite BANK MANDIRI and EMPEROR ENT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BANK MANDIRI position performs unexpectedly, EMPEROR ENT 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 EMPEROR ENT will offset losses from the drop in EMPEROR ENT's long position.| BANK MANDIRI vs. ARDAGH METAL PACDL 0001 | BANK MANDIRI vs. Harmony Gold Mining | BANK MANDIRI vs. De Grey Mining | BANK MANDIRI vs. MeVis Medical Solutions |
| EMPEROR ENT vs. PURETECH HEALTH PLC | EMPEROR ENT vs. Planet Fitness | EMPEROR ENT vs. Acadia Healthcare | EMPEROR ENT vs. AXWAY SOFTWARE EO |
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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