Correlation Between Kedawung Setia and Era Media

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

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

Diversification Opportunities for Kedawung Setia and Era Media

0.25

Correlation Coefficient

Kedawung Setia  Era Media

Modest diversification

The 3 months correlation between Kedawung and Era is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Kedawung Setia Industrial 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 Kedawung Setia 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 Kedawung Setia Industrial 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 Kedawung Setia i.e., Kedawung Setia and Era Media go up and down completely randomly.

Pair Corralation between Kedawung Setia and Era Media

Assuming the 90 days trading horizon Kedawung Setia Industrial is expected to generate 1.51 times more return on investment than Era Media. However, Kedawung Setia is 1.51 times more volatile than Era Media Sejahtera. It trades about 0.07 of its potential returns per unit of risk. Era Media Sejahtera is currently generating about 0.03 per unit of risk. If you would invest  39,875  in Kedawung Setia Industrial on October 10, 2024 and sell it today you would earn a total of  8,525  from holding Kedawung Setia Industrial or generate 21.38% return on investment over 90 days.

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

Kedawung Setia Industrial  vs.  Era Media Sejahtera

Kedawung Setia Industrial

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Kedawung Setia Industrial are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent forward-looking signals, Kedawung Setia 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

0 of 100

Very Weak

Over the last 90 days Era Media Sejahtera has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Era Media 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 Kedawung Setia and Era Media

The main advantage of trading using opposite Kedawung Setia and Era Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kedawung Setia 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 Kedawung Setia Industrial 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.

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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .