Correlation Between Erajaya Swasembada and Bank Tabungan

Can any of the company-specific risk be diversified away by investing in both Erajaya Swasembada and Bank Tabungan 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 Erajaya Swasembada and Bank Tabungan into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Erajaya Swasembada Tbk and Bank Tabungan Pensiunan, you can compare the effects of market volatilities on Erajaya Swasembada and Bank Tabungan 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 Erajaya Swasembada with a short position of Bank Tabungan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Erajaya Swasembada and Bank Tabungan.

Diversification Opportunities for Erajaya Swasembada and Bank Tabungan

0.1

Correlation Coefficient

Erajaya Swasembada  Bank Tabungan

Average diversification

The 3 months correlation between Erajaya and Bank is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Erajaya Swasembada Tbk and Bank Tabungan Pensiunan in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank Tabungan Pensiunan and Erajaya Swasembada 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 Erajaya Swasembada Tbk are associated (or correlated) with Bank Tabungan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank Tabungan Pensiunan has no effect on the direction of Erajaya Swasembada i.e., Erajaya Swasembada and Bank Tabungan go up and down completely randomly.

Pair Corralation between Erajaya Swasembada and Bank Tabungan

Assuming the 90 days trading horizon Erajaya Swasembada Tbk is expected to generate 1.55 times more return on investment than Bank Tabungan. However, Erajaya Swasembada is 1.55 times more volatile than Bank Tabungan Pensiunan. It trades about 0.02 of its potential returns per unit of risk. Bank Tabungan Pensiunan is currently generating about 0.0 per unit of risk. If you would invest  40,400  in Erajaya Swasembada Tbk on December 30, 2024 and sell it today you would earn a total of  0.00  from holding Erajaya Swasembada Tbk or generate 0.0% return on investment over 90 days.

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

Erajaya Swasembada Tbk  vs.  Bank Tabungan Pensiunan

Erajaya Swasembada Tbk

Risk-Adjusted Performance

Weak

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

Bank Tabungan Pensiunan

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Erajaya Swasembada and Bank Tabungan

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

The idea behind Erajaya Swasembada Tbk and Bank Tabungan Pensiunan 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.