Correlation Between Sona Topas and Era Media

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

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

Diversification Opportunities for Sona Topas and Era Media

-0.52

Correlation Coefficient

Sona Topas  Era Media

Excellent diversification

The 3 months correlation between Sona and Era is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Sona Topas Tourism 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 Sona Topas 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 Sona Topas Tourism 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 Sona Topas i.e., Sona Topas and Era Media go up and down completely randomly.

Pair Corralation between Sona Topas and Era Media

Assuming the 90 days trading horizon Sona Topas Tourism is expected to generate 2.26 times more return on investment than Era Media. However, Sona Topas is 2.26 times more volatile than Era Media Sejahtera. It trades about 0.06 of its potential returns per unit of risk. Era Media Sejahtera is currently generating about -0.15 per unit of risk. If you would invest  312,000  in Sona Topas Tourism on December 2, 2024 and sell it today you would lose (2,000) from holding Sona Topas Tourism or give up 0.64% of portfolio value over 90 days.

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

Sona Topas Tourism  vs.  Era Media Sejahtera

Sona Topas Tourism

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sona Topas Tourism 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.

Era Media Sejahtera

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Era Media Sejahtera are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Era Media disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sona Topas and Era Media

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

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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.