Correlation Between Emdeki Utama and Madusari Murni

Can any of the company-specific risk be diversified away by investing in both Emdeki Utama and Madusari Murni 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 Emdeki Utama and Madusari Murni into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Emdeki Utama Tbk and Madusari Murni Indah, you can compare the effects of market volatilities on Emdeki Utama and Madusari Murni 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 Emdeki Utama with a short position of Madusari Murni. Check out your portfolio center. Please also check ongoing floating volatility patterns of Emdeki Utama and Madusari Murni.

Diversification Opportunities for Emdeki Utama and Madusari Murni

0.81

Correlation Coefficient

Emdeki Utama  Madusari Murni

Very poor diversification

The 3 months correlation between Emdeki and Madusari is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Emdeki Utama Tbk and Madusari Murni Indah in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Madusari Murni Indah and Emdeki Utama 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 Emdeki Utama Tbk are associated (or correlated) with Madusari Murni. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Madusari Murni Indah has no effect on the direction of Emdeki Utama i.e., Emdeki Utama and Madusari Murni go up and down completely randomly.

Pair Corralation between Emdeki Utama and Madusari Murni

Assuming the 90 days trading horizon Emdeki Utama Tbk is expected to under-perform the Madusari Murni. But the stock apears to be less risky and, when comparing its historical volatility, Emdeki Utama Tbk is 1.43 times less risky than Madusari Murni. The stock trades about -0.19 of its potential returns per unit of risk. The Madusari Murni Indah is currently generating about -0.09 of returns per unit of risk over similar time horizon. If you would invest  20,800  in Madusari Murni Indah on December 22, 2024 and sell it today you would lose (1,800) from holding Madusari Murni Indah or give up 8.65% of portfolio value over 90 days.

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

Emdeki Utama Tbk  vs.  Madusari Murni Indah

Emdeki Utama Tbk

Risk-Adjusted Performance

Very Weak

Over the last 90 days Emdeki Utama Tbk 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.

Madusari Murni Indah

Risk-Adjusted Performance

Very Weak

Over the last 90 days Madusari Murni Indah has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's forward-looking signals remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with Emdeki Utama and Madusari Murni

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

The idea behind Emdeki Utama Tbk and Madusari Murni Indah 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 Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.