Correlation Between Dharma Polimetal and Pudjiadi Sons

Can any of the company-specific risk be diversified away by investing in both Dharma Polimetal and Pudjiadi Sons 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 Pudjiadi Sons 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 Pudjiadi Sons Tbk, you can compare the effects of market volatilities on Dharma Polimetal and Pudjiadi Sons 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 Pudjiadi Sons. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dharma Polimetal and Pudjiadi Sons.

Diversification Opportunities for Dharma Polimetal and Pudjiadi Sons

-0.76

Correlation Coefficient

Dharma Polimetal  Pudjiadi Sons

Pay attention - limited upside

The 3 months correlation between Dharma and Pudjiadi is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Dharma Polimetal Tbk and Pudjiadi Sons Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pudjiadi Sons Tbk 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 Pudjiadi Sons. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pudjiadi Sons Tbk has no effect on the direction of Dharma Polimetal i.e., Dharma Polimetal and Pudjiadi Sons go up and down completely randomly.

Pair Corralation between Dharma Polimetal and Pudjiadi Sons

Assuming the 90 days trading horizon Dharma Polimetal Tbk is expected to under-perform the Pudjiadi Sons. But the stock apears to be less risky and, when comparing its historical volatility, Dharma Polimetal Tbk is 5.32 times less risky than Pudjiadi Sons. The stock trades about -0.1 of its potential returns per unit of risk. The Pudjiadi Sons Tbk is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest  45,200  in Pudjiadi Sons Tbk on September 14, 2024 and sell it today you would earn a total of  86,300  from holding Pudjiadi Sons Tbk or generate 190.93% return on investment over 90 days.

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

Dharma Polimetal Tbk  vs.  Pudjiadi Sons Tbk

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 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.

Pudjiadi Sons Tbk

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Pudjiadi Sons Tbk are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Pudjiadi Sons disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Dharma Polimetal and Pudjiadi Sons

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

The idea behind Dharma Polimetal Tbk and Pudjiadi Sons 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.