Correlation Between Dharma Satya and Fks Multi

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

Diversification Opportunities for Dharma Satya and Fks Multi

0.67

Correlation Coefficient

Dharma Satya  Fks Multi

Poor diversification

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

Pair Corralation between Dharma Satya and Fks Multi

Assuming the 90 days trading horizon Dharma Satya is expected to generate 1.09 times less return on investment than Fks Multi. In addition to that, Dharma Satya is 1.38 times more volatile than Fks Multi Agro. It trades about 0.11 of its total potential returns per unit of risk. Fks Multi Agro is currently generating about 0.16 per unit of volatility. If you would invest  802,500  in Fks Multi Agro on September 20, 2024 and sell it today you would earn a total of  262,500  from holding Fks Multi Agro or generate 32.71% return on investment over 90 days.

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

Dharma Satya Nusantara  vs.  Fks Multi Agro

Dharma Satya Nusantara

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Dharma Satya Nusantara are ranked lower than 8 (%) 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.

Fks Multi Agro

Risk-Adjusted Performance

12 of 100

Good

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

Pair Trading with Dharma Satya and Fks Multi

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

The idea behind Dharma Satya Nusantara and Fks Multi Agro 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.

Check out your portfolio center.

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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.