Correlation Between Essentra Plc and PT Gajah

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

By analyzing existing cross correlation between Essentra plc and PT Gajah Tunggal, you can compare the effects of market volatilities on Essentra Plc and PT Gajah 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 Essentra Plc with a short position of PT Gajah. Check out your portfolio center. Please also check ongoing floating volatility patterns of Essentra Plc and PT Gajah.

Diversification Opportunities for Essentra Plc and PT Gajah

0.18

Correlation Coefficient

Essentra Plc  PT Gajah

Average diversification

The 3 months correlation between Essentra and GH8 is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Essentra plc and PT Gajah Tunggal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PT Gajah Tunggal and Essentra Plc 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 Essentra plc are associated (or correlated) with PT Gajah. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PT Gajah Tunggal has no effect on the direction of Essentra Plc i.e., Essentra Plc and PT Gajah go up and down completely randomly.

Pair Corralation between Essentra Plc and PT Gajah

Assuming the 90 days horizon Essentra plc is expected to under-perform the PT Gajah. But the stock apears to be less risky and, when comparing its historical volatility, Essentra plc is 5.41 times less risky than PT Gajah. The stock trades about -0.09 of its potential returns per unit of risk. The PT Gajah Tunggal is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  6.10  in PT Gajah Tunggal on September 23, 2024 and sell it today you would lose (1.25) from holding PT Gajah Tunggal or give up 20.49% of portfolio value over 90 days.

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

Essentra plc  vs.  PT Gajah Tunggal

Essentra plc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Essentra plc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

PT Gajah Tunggal

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PT Gajah Tunggal has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, PT Gajah is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Essentra Plc and PT Gajah

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

The idea behind Essentra plc and PT Gajah Tunggal 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.

Check out your portfolio center.

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 Bonds Directory module to find actively traded corporate debentures issued by US companies.