Correlation Between Darma Henwa and Bisi International

Can any of the company-specific risk be diversified away by investing in both Darma Henwa and Bisi International 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 Darma Henwa and Bisi International into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Darma Henwa Tbk and Bisi International Tbk, you can compare the effects of market volatilities on Darma Henwa and Bisi International 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 Darma Henwa with a short position of Bisi International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Darma Henwa and Bisi International.

Diversification Opportunities for Darma Henwa and Bisi International

-0.88

Correlation Coefficient

Darma Henwa  Bisi International

Pay attention - limited upside

The 3 months correlation between Darma and Bisi is -0.88. Overlapping area represents the amount of risk that can be diversified away by holding Darma Henwa Tbk and Bisi International Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bisi International Tbk and Darma Henwa 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 Darma Henwa Tbk are associated (or correlated) with Bisi International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bisi International Tbk has no effect on the direction of Darma Henwa i.e., Darma Henwa and Bisi International go up and down completely randomly.

Pair Corralation between Darma Henwa and Bisi International

Assuming the 90 days trading horizon Darma Henwa Tbk is expected to generate 1.9 times more return on investment than Bisi International. However, Darma Henwa is 1.9 times more volatile than Bisi International Tbk. It trades about 0.05 of its potential returns per unit of risk. Bisi International Tbk is currently generating about 0.01 per unit of risk. If you would invest  11,900  in Darma Henwa Tbk on September 13, 2024 and sell it today you would earn a total of  300.00  from holding Darma Henwa Tbk or generate 2.52% return on investment over 90 days.

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

Darma Henwa Tbk  vs.  Bisi International Tbk

Darma Henwa Tbk

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Darma Henwa Tbk are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Darma Henwa disclosed solid returns over the last few months and may actually be approaching a breakup point.

Bisi International Tbk

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bisi International Tbk 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 Darma Henwa and Bisi International

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

The idea behind Darma Henwa Tbk and Bisi International 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.