Correlation Between Leyand International and Eratex Djaja
Can any of the company-specific risk be diversified away by investing in both Leyand International and Eratex Djaja 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 Leyand International and Eratex Djaja into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Leyand International Tbk and Eratex Djaja Tbk, you can compare the effects of market volatilities on Leyand International and Eratex Djaja 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 Leyand International with a short position of Eratex Djaja. Check out your portfolio center. Please also check ongoing floating volatility patterns of Leyand International and Eratex Djaja.
Diversification Opportunities for Leyand International and Eratex Djaja
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Leyand and Eratex is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Leyand International Tbk and Eratex Djaja Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eratex Djaja Tbk and Leyand International 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 Leyand International Tbk are associated (or correlated) with Eratex Djaja. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eratex Djaja Tbk has no effect on the direction of Leyand International i.e., Leyand International and Eratex Djaja go up and down completely randomly.
Pair Corralation between Leyand International and Eratex Djaja
Assuming the 90 days trading horizon Leyand International Tbk is expected to under-perform the Eratex Djaja. In addition to that, Leyand International is 1.16 times more volatile than Eratex Djaja Tbk. It trades about -0.1 of its total potential returns per unit of risk. Eratex Djaja Tbk is currently generating about -0.02 per unit of volatility. If you would invest 12,500 in Eratex Djaja Tbk on September 14, 2024 and sell it today you would lose (1,800) from holding Eratex Djaja Tbk or give up 14.4% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 98.41% |
Values | Daily Returns |
Leyand International Tbk vs. Eratex Djaja Tbk
Performance |
Timeline |
Leyand International Tbk |
Eratex Djaja Tbk |
Leyand International and Eratex Djaja Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Leyand International and Eratex Djaja
The main advantage of trading using opposite Leyand International and Eratex Djaja positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Leyand International position performs unexpectedly, Eratex Djaja 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 Eratex Djaja will offset losses from the drop in Eratex Djaja's long position.Leyand International vs. Protech Mitra Perkasa | Leyand International vs. Alumindo Light Metal | Leyand International vs. Trinitan Metals and | Leyand International vs. Optima Prima Metal |
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Check out your portfolio center.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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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