Correlation Between Duta Intidaya and Alfa Energi

Can any of the company-specific risk be diversified away by investing in both Duta Intidaya and Alfa Energi 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 Duta Intidaya and Alfa Energi into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Duta Intidaya Tbk and Alfa Energi Investama, you can compare the effects of market volatilities on Duta Intidaya and Alfa Energi 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 Duta Intidaya with a short position of Alfa Energi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Duta Intidaya and Alfa Energi.

Diversification Opportunities for Duta Intidaya and Alfa Energi

-0.89

Correlation Coefficient

Duta Intidaya  Alfa Energi

Pay attention - limited upside

The 3 months correlation between Duta and Alfa is -0.89. Overlapping area represents the amount of risk that can be diversified away by holding Duta Intidaya Tbk and Alfa Energi Investama in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alfa Energi Investama and Duta Intidaya 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 Duta Intidaya Tbk are associated (or correlated) with Alfa Energi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alfa Energi Investama has no effect on the direction of Duta Intidaya i.e., Duta Intidaya and Alfa Energi go up and down completely randomly.

Pair Corralation between Duta Intidaya and Alfa Energi

Assuming the 90 days trading horizon Duta Intidaya Tbk is expected to generate 1.73 times more return on investment than Alfa Energi. However, Duta Intidaya is 1.73 times more volatile than Alfa Energi Investama. It trades about 0.13 of its potential returns per unit of risk. Alfa Energi Investama is currently generating about -0.11 per unit of risk. If you would invest  47,200  in Duta Intidaya Tbk on September 16, 2024 and sell it today you would earn a total of  15,800  from holding Duta Intidaya Tbk or generate 33.47% return on investment over 90 days.

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

Duta Intidaya Tbk  vs.  Alfa Energi Investama

Duta Intidaya Tbk

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Duta Intidaya Tbk are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Duta Intidaya disclosed solid returns over the last few months and may actually be approaching a breakup point.

Alfa Energi Investama

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Alfa Energi Investama 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.

Pair Trading with Duta Intidaya and Alfa Energi

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

The idea behind Duta Intidaya Tbk and Alfa Energi Investama 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.