Correlation Between Eratex Djaja and Ever Shine

Can any of the company-specific risk be diversified away by investing in both Eratex Djaja and Ever Shine 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 Eratex Djaja and Ever Shine into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Eratex Djaja Tbk and Ever Shine Textile, you can compare the effects of market volatilities on Eratex Djaja and Ever Shine 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 Eratex Djaja with a short position of Ever Shine. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eratex Djaja and Ever Shine.

Diversification Opportunities for Eratex Djaja and Ever Shine

-0.55

Correlation Coefficient

Eratex Djaja  Ever Shine

Excellent diversification

The 3 months correlation between Eratex and Ever is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Eratex Djaja Tbk and Ever Shine Textile in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ever Shine Textile and Eratex Djaja 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 Eratex Djaja Tbk are associated (or correlated) with Ever Shine. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ever Shine Textile has no effect on the direction of Eratex Djaja i.e., Eratex Djaja and Ever Shine go up and down completely randomly.

Pair Corralation between Eratex Djaja and Ever Shine

Assuming the 90 days trading horizon Eratex Djaja Tbk is expected to under-perform the Ever Shine. In addition to that, Eratex Djaja is 1.59 times more volatile than Ever Shine Textile. It trades about -0.03 of its total potential returns per unit of risk. Ever Shine Textile is currently generating about 0.04 per unit of volatility. If you would invest  4,000  in Ever Shine Textile on September 15, 2024 and sell it today you would earn a total of  200.00  from holding Ever Shine Textile or generate 5.0% return on investment over 90 days.

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

Eratex Djaja Tbk  vs.  Ever Shine Textile

Eratex Djaja Tbk

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Eratex Djaja 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.

Ever Shine Textile

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Ever Shine Textile are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Ever Shine may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Eratex Djaja and Ever Shine

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

The idea behind Eratex Djaja Tbk and Ever Shine Textile 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.