Correlation Between Adira Dinamika and Emdeki Utama

Can any of the company-specific risk be diversified away by investing in both Adira Dinamika and Emdeki Utama 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 Adira Dinamika and Emdeki Utama into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Adira Dinamika Multi and Emdeki Utama Tbk, you can compare the effects of market volatilities on Adira Dinamika and Emdeki Utama 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 Adira Dinamika with a short position of Emdeki Utama. Check out your portfolio center. Please also check ongoing floating volatility patterns of Adira Dinamika and Emdeki Utama.

Diversification Opportunities for Adira Dinamika and Emdeki Utama

0.92

Correlation Coefficient

Adira Dinamika  Emdeki Utama

Almost no diversification

The 3 months correlation between Adira and Emdeki is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Adira Dinamika Multi and Emdeki Utama Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emdeki Utama Tbk and Adira Dinamika 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 Adira Dinamika Multi are associated (or correlated) with Emdeki Utama. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Emdeki Utama Tbk has no effect on the direction of Adira Dinamika i.e., Adira Dinamika and Emdeki Utama go up and down completely randomly.

Pair Corralation between Adira Dinamika and Emdeki Utama

Assuming the 90 days trading horizon Adira Dinamika Multi is expected to generate 0.94 times more return on investment than Emdeki Utama. However, Adira Dinamika Multi is 1.06 times less risky than Emdeki Utama. It trades about -0.1 of its potential returns per unit of risk. Emdeki Utama Tbk is currently generating about -0.17 per unit of risk. If you would invest  985,000  in Adira Dinamika Multi on December 30, 2024 and sell it today you would lose (65,000) from holding Adira Dinamika Multi or give up 6.6% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

Adira Dinamika Multi  vs.  Emdeki Utama Tbk

Adira Dinamika Multi

Risk-Adjusted Performance

Very Weak

Over the last 90 days Adira Dinamika Multi has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's forward-looking signals remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Emdeki Utama Tbk

Risk-Adjusted Performance

Very Weak

Over the last 90 days Emdeki Utama Tbk has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's forward-looking signals remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with Adira Dinamika and Emdeki Utama

The main advantage of trading using opposite Adira Dinamika and Emdeki Utama positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Adira Dinamika position performs unexpectedly, Emdeki Utama 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 Emdeki Utama will offset losses from the drop in Emdeki Utama's long position.

The idea behind Adira Dinamika Multi and Emdeki Utama 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.

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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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.