Correlation Between Titan Company and Era Media

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

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

Diversification Opportunities for Titan Company and Era Media

0.06

Correlation Coefficient

Titan Company  Era Media

Significant diversification

The 3 months correlation between Titan and Era is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Titan Company Limited 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 Titan Company 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 Titan Company Limited 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 Titan Company i.e., Titan Company and Era Media go up and down completely randomly.

Pair Corralation between Titan Company and Era Media

Assuming the 90 days trading horizon Titan Company Limited is expected to under-perform the Era Media. But the stock apears to be less risky and, when comparing its historical volatility, Titan Company Limited is 1.21 times less risky than Era Media. The stock trades about -0.09 of its potential returns per unit of risk. The Era Media Sejahtera is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  5,700  in Era Media Sejahtera on September 13, 2024 and sell it today you would lose (200.00) from holding Era Media Sejahtera or give up 3.51% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

Titan Company Limited  vs.  Era Media Sejahtera

Titan Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Titan Company Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Era Media Sejahtera

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Era Media Sejahtera has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Era Media is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Titan Company and Era Media

The main advantage of trading using opposite Titan Company and Era Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Titan Company 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 Titan Company Limited 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 Search module to search for actively traded equities including funds and ETFs from over 30 global markets.