Correlation Between Dharma Polimetal and City Retail

Can any of the company-specific risk be diversified away by investing in both Dharma Polimetal and City Retail 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 Dharma Polimetal and City Retail into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Dharma Polimetal Tbk and City Retail Developments, you can compare the effects of market volatilities on Dharma Polimetal and City Retail 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 Dharma Polimetal with a short position of City Retail. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dharma Polimetal and City Retail.

Diversification Opportunities for Dharma Polimetal and City Retail

0.73

Correlation Coefficient

Dharma Polimetal  City Retail

Poor diversification

The 3 months correlation between Dharma and City is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Dharma Polimetal Tbk and City Retail Developments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on City Retail Developments and Dharma Polimetal 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 Dharma Polimetal Tbk are associated (or correlated) with City Retail. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of City Retail Developments has no effect on the direction of Dharma Polimetal i.e., Dharma Polimetal and City Retail go up and down completely randomly.

Pair Corralation between Dharma Polimetal and City Retail

Assuming the 90 days trading horizon Dharma Polimetal Tbk is expected to under-perform the City Retail. In addition to that, Dharma Polimetal is 1.74 times more volatile than City Retail Developments. It trades about -0.45 of its total potential returns per unit of risk. City Retail Developments is currently generating about -0.21 per unit of volatility. If you would invest  13,500  in City Retail Developments on September 18, 2024 and sell it today you would lose (500.00) from holding City Retail Developments or give up 3.7% of portfolio value over 90 days.

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

Dharma Polimetal Tbk  vs.  City Retail Developments

Dharma Polimetal Tbk

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dharma Polimetal 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.

City Retail Developments

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days City Retail Developments has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's forward-looking signals remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with Dharma Polimetal and City Retail

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

The idea behind Dharma Polimetal Tbk and City Retail Developments 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.