Correlation Between Emdeki Utama and Terregra Asia

Can any of the company-specific risk be diversified away by investing in both Emdeki Utama and Terregra Asia 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 Terregra Asia 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 Terregra Asia Energy, you can compare the effects of market volatilities on Emdeki Utama and Terregra Asia 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 Terregra Asia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Emdeki Utama and Terregra Asia.

Diversification Opportunities for Emdeki Utama and Terregra Asia

0.01

Correlation Coefficient

Emdeki Utama  Terregra Asia

Significant diversification

The 3 months correlation between Emdeki and Terregra is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Emdeki Utama Tbk and Terregra Asia Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Terregra Asia Energy 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 Terregra Asia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Terregra Asia Energy has no effect on the direction of Emdeki Utama i.e., Emdeki Utama and Terregra Asia go up and down completely randomly.

Pair Corralation between Emdeki Utama and Terregra Asia

Assuming the 90 days trading horizon Emdeki Utama is expected to generate 10.14 times less return on investment than Terregra Asia. But when comparing it to its historical volatility, Emdeki Utama Tbk is 4.82 times less risky than Terregra Asia. It trades about 0.01 of its potential returns per unit of risk. Terregra Asia Energy is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  5,000  in Terregra Asia Energy on October 11, 2024 and sell it today you would lose (100.00) from holding Terregra Asia Energy or give up 2.0% of portfolio value over 90 days.

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

Emdeki Utama Tbk  vs.  Terregra Asia Energy

Emdeki Utama Tbk

Risk-Adjusted Performance

0 of 100

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 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.

Terregra Asia Energy

Risk-Adjusted Performance

24 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Terregra Asia Energy are ranked lower than 24 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Terregra Asia disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Emdeki Utama and Terregra Asia

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

The idea behind Emdeki Utama Tbk and Terregra Asia Energy 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.