Correlation Between Dharma Satya and Andira Agro

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

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

Diversification Opportunities for Dharma Satya and Andira Agro

-0.74

Correlation Coefficient

Dharma Satya  Andira Agro

Pay attention - limited upside

The 3 months correlation between Dharma and Andira is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Dharma Satya Nusantara and Andira Agro Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Andira Agro Tbk and Dharma Satya 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 Satya Nusantara are associated (or correlated) with Andira Agro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Andira Agro Tbk has no effect on the direction of Dharma Satya i.e., Dharma Satya and Andira Agro go up and down completely randomly.

Pair Corralation between Dharma Satya and Andira Agro

Assuming the 90 days trading horizon Dharma Satya Nusantara is expected to generate 0.42 times more return on investment than Andira Agro. However, Dharma Satya Nusantara is 2.41 times less risky than Andira Agro. It trades about 0.09 of its potential returns per unit of risk. Andira Agro Tbk is currently generating about -0.05 per unit of risk. If you would invest  60,432  in Dharma Satya Nusantara on September 12, 2024 and sell it today you would earn a total of  58,068  from holding Dharma Satya Nusantara or generate 96.09% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	99.71%
Values	Daily Returns

Dharma Satya Nusantara  vs.  Andira Agro Tbk

Dharma Satya Nusantara

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Dharma Satya Nusantara are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Dharma Satya disclosed solid returns over the last few months and may actually be approaching a breakup point.

Andira Agro Tbk

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Andira Agro 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 Satya and Andira Agro

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

The idea behind Dharma Satya Nusantara and Andira Agro 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.