Correlation Between Asahimas Flat and Ekadharma International

Can any of the company-specific risk be diversified away by investing in both Asahimas Flat 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 Asahimas Flat and Ekadharma International into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Asahimas Flat Glass and Ekadharma International Tbk, you can compare the effects of market volatilities on Asahimas Flat 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 Asahimas Flat with a short position of Ekadharma International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Asahimas Flat and Ekadharma International.

Diversification Opportunities for Asahimas Flat and Ekadharma International

0.67

Correlation Coefficient

Asahimas Flat  Ekadharma International

Poor diversification

The 3 months correlation between Asahimas and Ekadharma is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Asahimas Flat Glass and Ekadharma International Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ekadharma International and Asahimas Flat 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 Asahimas Flat Glass 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 Asahimas Flat i.e., Asahimas Flat and Ekadharma International go up and down completely randomly.

Pair Corralation between Asahimas Flat and Ekadharma International

Assuming the 90 days trading horizon Asahimas Flat Glass is expected to generate 0.78 times more return on investment than Ekadharma International. However, Asahimas Flat Glass is 1.29 times less risky than Ekadharma International. It trades about -0.05 of its potential returns per unit of risk. Ekadharma International Tbk is currently generating about -0.1 per unit of risk. If you would invest  470,000  in Asahimas Flat Glass on September 4, 2024 and sell it today you would lose (12,000) from holding Asahimas Flat Glass or give up 2.55% of portfolio value over 90 days.

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

Asahimas Flat Glass  vs.  Ekadharma International Tbk

Asahimas Flat Glass

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Asahimas Flat Glass has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Asahimas Flat is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Ekadharma International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ekadharma International Tbk has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Ekadharma International is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Asahimas Flat and Ekadharma International

The main advantage of trading using opposite Asahimas Flat and Ekadharma International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Asahimas Flat 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 Asahimas Flat Glass 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.

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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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..