Correlation Between PT Chemstar and Obm Drilchem

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

By analyzing existing cross correlation between PT Chemstar Indonesia and Obm Drilchem PT, you can compare the effects of market volatilities on PT Chemstar and Obm Drilchem 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 PT Chemstar with a short position of Obm Drilchem. Check out your portfolio center. Please also check ongoing floating volatility patterns of PT Chemstar and Obm Drilchem.

Diversification Opportunities for PT Chemstar and Obm Drilchem

0.71

Correlation Coefficient

PT Chemstar  Obm Drilchem

Poor diversification

The 3 months correlation between CHEM and Obm is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding PT Chemstar Indonesia and Obm Drilchem PT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Obm Drilchem PT and PT Chemstar 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 PT Chemstar Indonesia are associated (or correlated) with Obm Drilchem. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Obm Drilchem PT has no effect on the direction of PT Chemstar i.e., PT Chemstar and Obm Drilchem go up and down completely randomly.

Pair Corralation between PT Chemstar and Obm Drilchem

Assuming the 90 days trading horizon PT Chemstar Indonesia is expected to under-perform the Obm Drilchem. But the stock apears to be less risky and, when comparing its historical volatility, PT Chemstar Indonesia is 1.03 times less risky than Obm Drilchem. The stock trades about -0.12 of its potential returns per unit of risk. The Obm Drilchem PT is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest  23,600  in Obm Drilchem PT on September 15, 2024 and sell it today you would lose (1,400) from holding Obm Drilchem PT or give up 5.93% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.44%
Values	Daily Returns

PT Chemstar Indonesia  vs.  Obm Drilchem PT

PT Chemstar Indonesia

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PT Chemstar Indonesia 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.

Obm Drilchem PT

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Obm Drilchem PT has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Obm Drilchem 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 PT Chemstar and Obm Drilchem

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

The idea behind PT Chemstar Indonesia and Obm Drilchem PT 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.