Correlation Between Era Media and PT Estee

Can any of the company-specific risk be diversified away by investing in both Era Media and PT Estee 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 PT Estee 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 PT Estee Gold, you can compare the effects of market volatilities on Era Media and PT Estee 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 PT Estee. Check out your portfolio center. Please also check ongoing floating volatility patterns of Era Media and PT Estee.

Diversification Opportunities for Era Media and PT Estee

0.63

Correlation Coefficient

Era Media  PT Estee

Poor diversification

The 3 months correlation between Era and EURO is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Era Media Sejahtera and PT Estee Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PT Estee Gold 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 PT Estee. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PT Estee Gold has no effect on the direction of Era Media i.e., Era Media and PT Estee go up and down completely randomly.

Pair Corralation between Era Media and PT Estee

Assuming the 90 days trading horizon Era Media is expected to generate 1.02 times less return on investment than PT Estee. In addition to that, Era Media is 1.48 times more volatile than PT Estee Gold. It trades about 0.14 of its total potential returns per unit of risk. PT Estee Gold is currently generating about 0.22 per unit of volatility. If you would invest  7,900  in PT Estee Gold on December 20, 2024 and sell it today you would earn a total of  7,800  from holding PT Estee Gold or generate 98.73% return on investment over 90 days.

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

Era Media Sejahtera  vs.  PT Estee Gold

Era Media Sejahtera

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Era Media Sejahtera are ranked lower than 11 (%) 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.

PT Estee Gold

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in PT Estee Gold are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, PT Estee disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Era Media and PT Estee

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

The idea behind Era Media Sejahtera and PT Estee Gold 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.