Correlation Between Energi Mega and Central Proteina

Can any of the company-specific risk be diversified away by investing in both Energi Mega and Central Proteina 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 Central Proteina 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 Central Proteina Prima, you can compare the effects of market volatilities on Energi Mega and Central Proteina 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 Central Proteina. Check out your portfolio center. Please also check ongoing floating volatility patterns of Energi Mega and Central Proteina.

Diversification Opportunities for Energi Mega and Central Proteina

0.36

Correlation Coefficient

Energi Mega  Central Proteina

Weak diversification

The 3 months correlation between Energi and Central is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Energi Mega Persada and Central Proteina Prima in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Central Proteina Prima 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 Central Proteina. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Central Proteina Prima has no effect on the direction of Energi Mega i.e., Energi Mega and Central Proteina go up and down completely randomly.

Pair Corralation between Energi Mega and Central Proteina

Assuming the 90 days trading horizon Energi Mega Persada is expected to generate 1.35 times more return on investment than Central Proteina. However, Energi Mega is 1.35 times more volatile than Central Proteina Prima. It trades about 0.01 of its potential returns per unit of risk. Central Proteina Prima is currently generating about 0.0 per unit of risk. If you would invest  27,200  in Energi Mega Persada on October 7, 2024 and sell it today you would lose (3,000) from holding Energi Mega Persada or give up 11.03% of portfolio value over 90 days.

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

Energi Mega Persada  vs.  Central Proteina Prima

Energi Mega Persada

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Energi Mega Persada are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent forward-looking signals, Energi Mega is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Central Proteina Prima

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Central Proteina Prima has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Central Proteina is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Energi Mega and Central Proteina

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

The idea behind Energi Mega Persada and Central Proteina Prima 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.