Correlation Between Surya Esa and Era Mandiri

Can any of the company-specific risk be diversified away by investing in both Surya Esa and Era Mandiri 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 Surya Esa and Era Mandiri into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Surya Esa Perkasa and Era Mandiri Cemerlang, you can compare the effects of market volatilities on Surya Esa and Era Mandiri 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 Surya Esa with a short position of Era Mandiri. Check out your portfolio center. Please also check ongoing floating volatility patterns of Surya Esa and Era Mandiri.

Diversification Opportunities for Surya Esa and Era Mandiri

-0.92

Correlation Coefficient

Surya Esa  Era Mandiri

Pay attention - limited upside

The 3 months correlation between Surya and Era is -0.92. Overlapping area represents the amount of risk that can be diversified away by holding Surya Esa Perkasa and Era Mandiri Cemerlang in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Era Mandiri Cemerlang and Surya Esa 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 Surya Esa Perkasa are associated (or correlated) with Era Mandiri. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Era Mandiri Cemerlang has no effect on the direction of Surya Esa i.e., Surya Esa and Era Mandiri go up and down completely randomly.

Pair Corralation between Surya Esa and Era Mandiri

Assuming the 90 days trading horizon Surya Esa Perkasa is expected to under-perform the Era Mandiri. But the stock apears to be less risky and, when comparing its historical volatility, Surya Esa Perkasa is 2.3 times less risky than Era Mandiri. The stock trades about -0.18 of its potential returns per unit of risk. The Era Mandiri Cemerlang is currently generating about 0.63 of returns per unit of risk over similar time horizon. If you would invest  2,400  in Era Mandiri Cemerlang on December 29, 2024 and sell it today you would earn a total of  17,300  from holding Era Mandiri Cemerlang or generate 720.83% return on investment over 90 days.

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

Surya Esa Perkasa  vs.  Era Mandiri Cemerlang

Surya Esa Perkasa

Risk-Adjusted Performance

Very Weak

Over the last 90 days Surya Esa Perkasa 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.

Era Mandiri Cemerlang

Risk-Adjusted Performance

Excellent

Compared to the overall equity markets, risk-adjusted returns on investments in Era Mandiri Cemerlang are ranked lower than 49 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Era Mandiri disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Surya Esa and Era Mandiri

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

The idea behind Surya Esa Perkasa and Era Mandiri Cemerlang 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.