Correlation Between Communication Cable and Darmi Bersaudara

Can any of the company-specific risk be diversified away by investing in both Communication Cable and Darmi Bersaudara 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 Communication Cable and Darmi Bersaudara into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Communication Cable Systems and Darmi Bersaudara Tbk, you can compare the effects of market volatilities on Communication Cable and Darmi Bersaudara 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 Communication Cable with a short position of Darmi Bersaudara. Check out your portfolio center. Please also check ongoing floating volatility patterns of Communication Cable and Darmi Bersaudara.

Diversification Opportunities for Communication Cable and Darmi Bersaudara

0.0

Correlation Coefficient

Communication Cable  Darmi Bersaudara

Pay attention - limited upside

The 3 months correlation between Communication and Darmi is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Communication Cable Systems and Darmi Bersaudara Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Darmi Bersaudara Tbk and Communication Cable 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 Communication Cable Systems are associated (or correlated) with Darmi Bersaudara. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Darmi Bersaudara Tbk has no effect on the direction of Communication Cable i.e., Communication Cable and Darmi Bersaudara go up and down completely randomly.

Pair Corralation between Communication Cable and Darmi Bersaudara

Assuming the 90 days trading horizon Communication Cable Systems is expected to under-perform the Darmi Bersaudara. But the stock apears to be less risky and, when comparing its historical volatility, Communication Cable Systems is 1.62 times less risky than Darmi Bersaudara. The stock trades about -0.05 of its potential returns per unit of risk. The Darmi Bersaudara Tbk is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  5,000  in Darmi Bersaudara Tbk on September 28, 2024 and sell it today you would lose (3,200) from holding Darmi Bersaudara Tbk or give up 64.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Communication Cable Systems  vs.  Darmi Bersaudara Tbk

Communication Cable

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Communication Cable Systems are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent forward-looking signals, Communication Cable is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Darmi Bersaudara Tbk

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Darmi Bersaudara Tbk has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Darmi Bersaudara 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 Communication Cable and Darmi Bersaudara

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

The idea behind Communication Cable Systems and Darmi Bersaudara Tbk 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.