Correlation Between PT Estee and Victoria Care

Can any of the company-specific risk be diversified away by investing in both PT Estee and Victoria Care 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 Victoria Care 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 Victoria Care Indonesia, you can compare the effects of market volatilities on PT Estee and Victoria Care 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 Victoria Care. Check out your portfolio center. Please also check ongoing floating volatility patterns of PT Estee and Victoria Care.

Diversification Opportunities for PT Estee and Victoria Care

0.62

Correlation Coefficient

PT Estee  Victoria Care

Poor diversification

The 3 months correlation between EURO and Victoria is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding PT Estee Gold and Victoria Care Indonesia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Victoria Care Indonesia 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 Victoria Care. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Victoria Care Indonesia has no effect on the direction of PT Estee i.e., PT Estee and Victoria Care go up and down completely randomly.

Pair Corralation between PT Estee and Victoria Care

Assuming the 90 days trading horizon PT Estee Gold is expected to generate 6.0 times more return on investment than Victoria Care. However, PT Estee is 6.0 times more volatile than Victoria Care Indonesia. It trades about 0.01 of its potential returns per unit of risk. Victoria Care Indonesia is currently generating about 0.0 per unit of risk. If you would invest  13,709  in PT Estee Gold on October 3, 2024 and sell it today you would lose (2,409) from holding PT Estee Gold or give up 17.57% of portfolio value over 90 days.

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

PT Estee Gold  vs.  Victoria Care Indonesia

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 conflicting performance in the last few months, the Stock's forward-looking signals remain quite persistent which may send shares a bit higher in February 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Victoria Care Indonesia

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Victoria Care Indonesia are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent forward-looking signals, Victoria Care 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 PT Estee and Victoria Care

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

The idea behind PT Estee Gold and Victoria Care 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.