Correlation Between Eagle High and Salim Ivomas

Can any of the company-specific risk be diversified away by investing in both Eagle High and Salim Ivomas 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 Eagle High and Salim Ivomas into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Eagle High Plantations and Salim Ivomas Pratama, you can compare the effects of market volatilities on Eagle High and Salim Ivomas 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 Eagle High with a short position of Salim Ivomas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eagle High and Salim Ivomas.

Diversification Opportunities for Eagle High and Salim Ivomas

0.79

Correlation Coefficient

Eagle High  Salim Ivomas

Poor diversification

The 3 months correlation between Eagle and Salim is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Eagle High Plantations and Salim Ivomas Pratama in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Salim Ivomas Pratama and Eagle High 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 Eagle High Plantations are associated (or correlated) with Salim Ivomas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Salim Ivomas Pratama has no effect on the direction of Eagle High i.e., Eagle High and Salim Ivomas go up and down completely randomly.

Pair Corralation between Eagle High and Salim Ivomas

Assuming the 90 days trading horizon Eagle High Plantations is expected to generate 1.73 times more return on investment than Salim Ivomas. However, Eagle High is 1.73 times more volatile than Salim Ivomas Pratama. It trades about -0.06 of its potential returns per unit of risk. Salim Ivomas Pratama is currently generating about -0.12 per unit of risk. If you would invest  5,900  in Eagle High Plantations on November 29, 2024 and sell it today you would lose (400.00) from holding Eagle High Plantations or give up 6.78% of portfolio value over 90 days.

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

Eagle High Plantations  vs.  Salim Ivomas Pratama

Eagle High Plantations

Risk-Adjusted Performance

Very Weak

Over the last 90 days Eagle High Plantations 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.

Salim Ivomas Pratama

Risk-Adjusted Performance

Very Weak

Over the last 90 days Salim Ivomas Pratama 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.

Pair Trading with Eagle High and Salim Ivomas

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

The idea behind Eagle High Plantations and Salim Ivomas Pratama 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.