Correlation Between Dharma Polimetal and Victoria Insurance

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

Diversification Opportunities for Dharma Polimetal and Victoria Insurance

0.67

Correlation Coefficient

Dharma Polimetal  Victoria Insurance

Poor diversification

The 3 months correlation between Dharma and Victoria is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Dharma Polimetal Tbk and Victoria Insurance Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Victoria Insurance 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 Victoria Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Victoria Insurance Tbk has no effect on the direction of Dharma Polimetal i.e., Dharma Polimetal and Victoria Insurance go up and down completely randomly.

Pair Corralation between Dharma Polimetal and Victoria Insurance

Assuming the 90 days trading horizon Dharma Polimetal Tbk is expected to under-perform the Victoria Insurance. In addition to that, Dharma Polimetal is 1.09 times more volatile than Victoria Insurance Tbk. It trades about -0.12 of its total potential returns per unit of risk. Victoria Insurance Tbk is currently generating about -0.13 per unit of volatility. If you would invest  12,400  in Victoria Insurance Tbk on September 17, 2024 and sell it today you would lose (1,500) from holding Victoria Insurance Tbk or give up 12.1% 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.  Victoria Insurance 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.

Victoria Insurance Tbk

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Victoria Insurance 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.

Pair Trading with Dharma Polimetal and Victoria Insurance

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

The idea behind Dharma Polimetal Tbk and Victoria Insurance 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.