Correlation Between Erajaya Swasembada and Delta Dunia

Can any of the company-specific risk be diversified away by investing in both Erajaya Swasembada and Delta Dunia 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 Delta Dunia 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 Delta Dunia Makmur, you can compare the effects of market volatilities on Erajaya Swasembada and Delta Dunia 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 Delta Dunia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Erajaya Swasembada and Delta Dunia.

Diversification Opportunities for Erajaya Swasembada and Delta Dunia

0.41

Correlation Coefficient

Erajaya Swasembada  Delta Dunia

Very weak diversification

The 3 months correlation between Erajaya and Delta is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Erajaya Swasembada Tbk and Delta Dunia Makmur in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Delta Dunia Makmur 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 Delta Dunia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Delta Dunia Makmur has no effect on the direction of Erajaya Swasembada i.e., Erajaya Swasembada and Delta Dunia go up and down completely randomly.

Pair Corralation between Erajaya Swasembada and Delta Dunia

Assuming the 90 days trading horizon Erajaya Swasembada Tbk is expected to generate 0.77 times more return on investment than Delta Dunia. However, Erajaya Swasembada Tbk is 1.29 times less risky than Delta Dunia. It trades about 0.01 of its potential returns per unit of risk. Delta Dunia Makmur is currently generating about 0.0 per unit of risk. If you would invest  41,800  in Erajaya Swasembada Tbk on September 3, 2024 and sell it today you would lose (200.00) from holding Erajaya Swasembada Tbk or give up 0.48% of portfolio value over 90 days.

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

Erajaya Swasembada Tbk  vs.  Delta Dunia Makmur

Erajaya Swasembada Tbk

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Erajaya Swasembada Tbk has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

Delta Dunia Makmur

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Delta Dunia Makmur has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Delta Dunia 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 Delta Dunia

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

The idea behind Erajaya Swasembada Tbk and Delta Dunia Makmur 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.