Correlation Between Elang Mahkota and Humpuss Intermoda

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Can any of the company-specific risk be diversified away by investing in both Elang Mahkota and Humpuss Intermoda 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 Elang Mahkota and Humpuss Intermoda into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Elang Mahkota Teknologi and Humpuss Intermoda Transportasi, you can compare the effects of market volatilities on Elang Mahkota and Humpuss Intermoda 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 Elang Mahkota with a short position of Humpuss Intermoda. Check out your portfolio center. Please also check ongoing floating volatility patterns of Elang Mahkota and Humpuss Intermoda.

Diversification Opportunities for Elang Mahkota and Humpuss Intermoda

0.76
  Correlation Coefficient

Poor diversification

The 3 months correlation between Elang and Humpuss is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Elang Mahkota Teknologi and Humpuss Intermoda Transportasi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Humpuss Intermoda and Elang Mahkota 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 Elang Mahkota Teknologi are associated (or correlated) with Humpuss Intermoda. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Humpuss Intermoda has no effect on the direction of Elang Mahkota i.e., Elang Mahkota and Humpuss Intermoda go up and down completely randomly.

Pair Corralation between Elang Mahkota and Humpuss Intermoda

Assuming the 90 days trading horizon Elang Mahkota Teknologi is expected to generate 0.99 times more return on investment than Humpuss Intermoda. However, Elang Mahkota Teknologi is 1.01 times less risky than Humpuss Intermoda. It trades about 0.19 of its potential returns per unit of risk. Humpuss Intermoda Transportasi is currently generating about 0.18 per unit of risk. If you would invest  40,600  in Elang Mahkota Teknologi on September 14, 2024 and sell it today you would earn a total of  19,900  from holding Elang Mahkota Teknologi or generate 49.01% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Elang Mahkota Teknologi  vs.  Humpuss Intermoda Transportasi

 Performance 
       Timeline  
Elang Mahkota Teknologi 

Risk-Adjusted Performance

14 of 100

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

Risk-Adjusted Performance

14 of 100

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

Elang Mahkota and Humpuss Intermoda Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Elang Mahkota and Humpuss Intermoda

The main advantage of trading using opposite Elang Mahkota and Humpuss Intermoda positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Elang Mahkota position performs unexpectedly, Humpuss Intermoda 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 Humpuss Intermoda will offset losses from the drop in Humpuss Intermoda's long position.
The idea behind Elang Mahkota Teknologi and Humpuss Intermoda Transportasi 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.

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