Correlation Between PT Estee and Era Media

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

By analyzing existing cross correlation between PT Estee Gold and Era Media Sejahtera, you can compare the effects of market volatilities on PT Estee and Era Media 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 PT Estee with a short position of Era Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of PT Estee and Era Media.

Diversification Opportunities for PT Estee and Era Media

0.07

Correlation Coefficient

PT Estee  Era Media

Significant diversification

The 3 months correlation between EURO and Era is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding PT Estee Gold and Era Media Sejahtera in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Era Media Sejahtera and PT Estee 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 PT Estee Gold are associated (or correlated) with Era Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Era Media Sejahtera has no effect on the direction of PT Estee i.e., PT Estee and Era Media go up and down completely randomly.

Pair Corralation between PT Estee and Era Media

Assuming the 90 days trading horizon PT Estee Gold is expected to generate 0.64 times more return on investment than Era Media. However, PT Estee Gold is 1.56 times less risky than Era Media. It trades about 0.6 of its potential returns per unit of risk. Era Media Sejahtera is currently generating about 0.34 per unit of risk. If you would invest  8,600  in PT Estee Gold on October 24, 2024 and sell it today you would earn a total of  8,300  from holding PT Estee Gold or generate 96.51% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	94.74%
Values	Daily Returns

PT Estee Gold  vs.  Era Media Sejahtera

PT Estee Gold

Risk-Adjusted Performance

0 of 100

Very Weak

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

Era Media Sejahtera

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Era Media Sejahtera are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Era Media disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with PT Estee and Era Media

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

The idea behind PT Estee Gold and Era Media Sejahtera 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.