Correlation Between Terregra Asia and Era Mandiri
Can any of the company-specific risk be diversified away by investing in both Terregra Asia and Era Mandiri 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 Terregra Asia and Era Mandiri into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Terregra Asia Energy and Era Mandiri Cemerlang, you can compare the effects of market volatilities on Terregra Asia and Era Mandiri 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 Terregra Asia with a short position of Era Mandiri. Check out your portfolio center. Please also check ongoing floating volatility patterns of Terregra Asia and Era Mandiri.
Diversification Opportunities for Terregra Asia and Era Mandiri
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Terregra and Era is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Terregra Asia Energy and Era Mandiri Cemerlang in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Era Mandiri Cemerlang and Terregra Asia 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 Terregra Asia Energy are associated (or correlated) with Era Mandiri. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Era Mandiri Cemerlang has no effect on the direction of Terregra Asia i.e., Terregra Asia and Era Mandiri go up and down completely randomly.
Pair Corralation between Terregra Asia and Era Mandiri
Assuming the 90 days trading horizon Terregra Asia Energy is expected to under-perform the Era Mandiri. In addition to that, Terregra Asia is 1.01 times more volatile than Era Mandiri Cemerlang. It trades about -0.04 of its total potential returns per unit of risk. Era Mandiri Cemerlang is currently generating about -0.03 per unit of volatility. If you would invest 6,000 in Era Mandiri Cemerlang on September 4, 2024 and sell it today you would lose (3,400) from holding Era Mandiri Cemerlang or give up 56.67% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.79% |
| Values | Daily Returns |
Terregra Asia Energy vs. Era Mandiri Cemerlang
Performance |
| Timeline |
| Terregra Asia Energy |
| Era Mandiri Cemerlang |
Terregra Asia and Era Mandiri Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Terregra Asia and Era Mandiri
The main advantage of trading using opposite Terregra Asia and Era Mandiri positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Terregra Asia position performs unexpectedly, Era Mandiri 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 Era Mandiri will offset losses from the drop in Era Mandiri's long position.| Terregra Asia vs. Kapuas Prima Coal | Terregra Asia vs. Cikarang Listrindo Tbk | Terregra Asia vs. PP Presisi Tbk | Terregra Asia vs. Alfa Energi Investama |
| Era Mandiri vs. Dharma Satya Nusantara | Era Mandiri vs. Saratoga Investama Sedaya | Era Mandiri vs. Surya Esa Perkasa | Era Mandiri vs. Elang Mahkota Teknologi |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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