Correlation Between Era Media and Bekasi Fajar

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

By analyzing existing cross correlation between Era Media Sejahtera and Bekasi Fajar Industrial, you can compare the effects of market volatilities on Era Media and Bekasi Fajar 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 Era Media with a short position of Bekasi Fajar. Check out your portfolio center. Please also check ongoing floating volatility patterns of Era Media and Bekasi Fajar.

Diversification Opportunities for Era Media and Bekasi Fajar

-0.23

Correlation Coefficient

Era Media  Bekasi Fajar

Very good diversification

The 3 months correlation between Era and Bekasi is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Era Media Sejahtera and Bekasi Fajar Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bekasi Fajar Industrial and Era Media 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 Era Media Sejahtera are associated (or correlated) with Bekasi Fajar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bekasi Fajar Industrial has no effect on the direction of Era Media i.e., Era Media and Bekasi Fajar go up and down completely randomly.

Pair Corralation between Era Media and Bekasi Fajar

Assuming the 90 days trading horizon Era Media Sejahtera is expected to generate 5.84 times more return on investment than Bekasi Fajar. However, Era Media is 5.84 times more volatile than Bekasi Fajar Industrial. It trades about 0.34 of its potential returns per unit of risk. Bekasi Fajar Industrial is currently generating about -0.09 per unit of risk. If you would invest  5,400  in Era Media Sejahtera on October 24, 2024 and sell it today you would earn a total of  3,700  from holding Era Media Sejahtera or generate 68.52% return on investment over 90 days.

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

Era Media Sejahtera  vs.  Bekasi Fajar Industrial

Era Media Sejahtera

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Era Media Sejahtera are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Era Media disclosed solid returns over the last few months and may actually be approaching a breakup point.

Bekasi Fajar Industrial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bekasi Fajar Industrial 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 February 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Era Media and Bekasi Fajar

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

The idea behind Era Media Sejahtera and Bekasi Fajar Industrial 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.