Correlation Between PT Temas and Ekadharma International
Can any of the company-specific risk be diversified away by investing in both PT Temas and Ekadharma International 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 PT Temas and Ekadharma International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PT Temas Tbk and Ekadharma International Tbk, you can compare the effects of market volatilities on PT Temas and Ekadharma International 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 PT Temas with a short position of Ekadharma International. Check out your portfolio center. Please also check ongoing floating volatility patterns of PT Temas and Ekadharma International.
Diversification Opportunities for PT Temas and Ekadharma International
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between TMAS and Ekadharma is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding PT Temas Tbk and Ekadharma International Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ekadharma International and PT Temas 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 PT Temas Tbk are associated (or correlated) with Ekadharma International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ekadharma International has no effect on the direction of PT Temas i.e., PT Temas and Ekadharma International go up and down completely randomly.
Pair Corralation between PT Temas and Ekadharma International
Assuming the 90 days trading horizon PT Temas Tbk is expected to generate 26.71 times more return on investment than Ekadharma International. However, PT Temas is 26.71 times more volatile than Ekadharma International Tbk. It trades about 0.04 of its potential returns per unit of risk. Ekadharma International Tbk is currently generating about -0.03 per unit of risk. If you would invest 18,731 in PT Temas Tbk on August 28, 2024 and sell it today you would lose (4,731) from holding PT Temas Tbk or give up 25.26% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.78% |
| Values | Daily Returns |
PT Temas Tbk vs. Ekadharma International Tbk
Performance |
| Timeline |
| PT Temas Tbk |
| Ekadharma International |
PT Temas and Ekadharma International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PT Temas and Ekadharma International
The main advantage of trading using opposite PT Temas and Ekadharma International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PT Temas position performs unexpectedly, Ekadharma International 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 Ekadharma International will offset losses from the drop in Ekadharma International's long position.The idea behind PT Temas Tbk and Ekadharma International Tbk 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.| Ekadharma International vs. Rukun Raharja Tbk | Ekadharma International vs. Weha Transportasi Indonesia |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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