Correlation Between Energi Mega and Global Mediacom

Can any of the company-specific risk be diversified away by investing in both Energi Mega and Global Mediacom 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 Energi Mega and Global Mediacom into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Energi Mega Persada and Global Mediacom Tbk, you can compare the effects of market volatilities on Energi Mega and Global Mediacom 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 Energi Mega with a short position of Global Mediacom. Check out your portfolio center. Please also check ongoing floating volatility patterns of Energi Mega and Global Mediacom.

Diversification Opportunities for Energi Mega and Global Mediacom

0.89

Correlation Coefficient

Energi Mega  Global Mediacom

Very poor diversification

The 3 months correlation between Energi and Global is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Energi Mega Persada and Global Mediacom Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Mediacom Tbk and Energi Mega 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 Energi Mega Persada are associated (or correlated) with Global Mediacom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Mediacom Tbk has no effect on the direction of Energi Mega i.e., Energi Mega and Global Mediacom go up and down completely randomly.

Pair Corralation between Energi Mega and Global Mediacom

Assuming the 90 days trading horizon Energi Mega Persada is expected to generate 1.27 times more return on investment than Global Mediacom. However, Energi Mega is 1.27 times more volatile than Global Mediacom Tbk. It trades about -0.16 of its potential returns per unit of risk. Global Mediacom Tbk is currently generating about -0.21 per unit of risk. If you would invest  23,600  in Energi Mega Persada on December 2, 2024 and sell it today you would lose (5,700) from holding Energi Mega Persada or give up 24.15% of portfolio value over 90 days.

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

Energi Mega Persada  vs.  Global Mediacom Tbk

Energi Mega Persada

Risk-Adjusted Performance

Very Weak

Over the last 90 days Energi Mega Persada 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 April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Global Mediacom Tbk

Risk-Adjusted Performance

Very Weak

Over the last 90 days Global Mediacom Tbk 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 April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Energi Mega and Global Mediacom

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

The idea behind Energi Mega Persada and Global Mediacom 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.