Correlation Between Enseval Putra and Fast Food

Can any of the company-specific risk be diversified away by investing in both Enseval Putra and Fast Food 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 Enseval Putra and Fast Food into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Enseval Putra Megatrading and Fast Food Indonesia, you can compare the effects of market volatilities on Enseval Putra and Fast Food 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 Enseval Putra with a short position of Fast Food. Check out your portfolio center. Please also check ongoing floating volatility patterns of Enseval Putra and Fast Food.

Diversification Opportunities for Enseval Putra and Fast Food

0.87

Correlation Coefficient

Enseval Putra  Fast Food

Very poor diversification

The 3 months correlation between Enseval and Fast is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Enseval Putra Megatrading and Fast Food Indonesia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fast Food Indonesia and Enseval Putra 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 Enseval Putra Megatrading are associated (or correlated) with Fast Food. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fast Food Indonesia has no effect on the direction of Enseval Putra i.e., Enseval Putra and Fast Food go up and down completely randomly.

Pair Corralation between Enseval Putra and Fast Food

Assuming the 90 days trading horizon Enseval Putra Megatrading is expected to generate 0.22 times more return on investment than Fast Food. However, Enseval Putra Megatrading is 4.46 times less risky than Fast Food. It trades about -0.18 of its potential returns per unit of risk. Fast Food Indonesia is currently generating about -0.11 per unit of risk. If you would invest  243,000  in Enseval Putra Megatrading on December 30, 2024 and sell it today you would lose (29,000) from holding Enseval Putra Megatrading or give up 11.93% of portfolio value over 90 days.

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

Enseval Putra Megatrading  vs.  Fast Food Indonesia

Enseval Putra Megatrading

Risk-Adjusted Performance

Very Weak

Over the last 90 days Enseval Putra Megatrading 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.

Fast Food Indonesia

Risk-Adjusted Performance

Very Weak

Over the last 90 days Fast Food Indonesia 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 Enseval Putra and Fast Food

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

The idea behind Enseval Putra Megatrading and Fast Food Indonesia 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.