Correlation Between Erajaya Swasembada and PT Pelayaran

Can any of the company-specific risk be diversified away by investing in both Erajaya Swasembada and PT Pelayaran 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 Erajaya Swasembada and PT Pelayaran into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Erajaya Swasembada Tbk and PT Pelayaran Tamarin, you can compare the effects of market volatilities on Erajaya Swasembada and PT Pelayaran 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 Erajaya Swasembada with a short position of PT Pelayaran. Check out your portfolio center. Please also check ongoing floating volatility patterns of Erajaya Swasembada and PT Pelayaran.

Diversification Opportunities for Erajaya Swasembada and PT Pelayaran

0.45

Correlation Coefficient

Erajaya Swasembada  PT Pelayaran

Very weak diversification

The 3 months correlation between Erajaya and TAMU is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Erajaya Swasembada Tbk and PT Pelayaran Tamarin in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PT Pelayaran Tamarin and Erajaya Swasembada 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 Erajaya Swasembada Tbk are associated (or correlated) with PT Pelayaran. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PT Pelayaran Tamarin has no effect on the direction of Erajaya Swasembada i.e., Erajaya Swasembada and PT Pelayaran go up and down completely randomly.

Pair Corralation between Erajaya Swasembada and PT Pelayaran

Assuming the 90 days trading horizon Erajaya Swasembada Tbk is expected to generate 0.45 times more return on investment than PT Pelayaran. However, Erajaya Swasembada Tbk is 2.23 times less risky than PT Pelayaran. It trades about -0.07 of its potential returns per unit of risk. PT Pelayaran Tamarin is currently generating about -0.09 per unit of risk. If you would invest  46,200  in Erajaya Swasembada Tbk on September 16, 2024 and sell it today you would lose (5,200) from holding Erajaya Swasembada Tbk or give up 11.26% of portfolio value over 90 days.

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

Erajaya Swasembada Tbk  vs.  PT Pelayaran Tamarin

Erajaya Swasembada Tbk

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Erajaya Swasembada 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.

PT Pelayaran Tamarin

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PT Pelayaran Tamarin 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 January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Erajaya Swasembada and PT Pelayaran

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

The idea behind Erajaya Swasembada Tbk and PT Pelayaran Tamarin 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.