Correlation Between Estika Tata and Era Mandiri

Can any of the company-specific risk be diversified away by investing in both Estika Tata 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 Estika Tata and Era Mandiri into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Estika Tata Tiara and Era Mandiri Cemerlang, you can compare the effects of market volatilities on Estika Tata 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 Estika Tata with a short position of Era Mandiri. Check out your portfolio center. Please also check ongoing floating volatility patterns of Estika Tata and Era Mandiri.

Diversification Opportunities for Estika Tata and Era Mandiri

0.65

Correlation Coefficient

Estika Tata  Era Mandiri

Poor diversification

The 3 months correlation between Estika and Era is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Estika Tata Tiara 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 Estika Tata 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 Estika Tata Tiara 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 Estika Tata i.e., Estika Tata and Era Mandiri go up and down completely randomly.

Pair Corralation between Estika Tata and Era Mandiri

Assuming the 90 days trading horizon Estika Tata Tiara is expected to generate 1.49 times more return on investment than Era Mandiri. However, Estika Tata is 1.49 times more volatile than Era Mandiri Cemerlang. It trades about -0.05 of its potential returns per unit of risk. Era Mandiri Cemerlang is currently generating about -0.25 per unit of risk. If you would invest  15,362  in Estika Tata Tiara on September 3, 2024 and sell it today you would lose (3,662) from holding Estika Tata Tiara or give up 23.84% of portfolio value over 90 days.

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

Estika Tata Tiara  vs.  Era Mandiri Cemerlang

Estika Tata Tiara

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Estika Tata Tiara has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's forward-looking signals remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Era Mandiri Cemerlang

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Era Mandiri Cemerlang has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's forward-looking signals remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Estika Tata and Era Mandiri

The main advantage of trading using opposite Estika Tata and Era Mandiri positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Estika Tata 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.

The idea behind Estika Tata Tiara and Era Mandiri Cemerlang 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..