Correlation Between Dharma Satya and Wahana Pronatural

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

Diversification Opportunities for Dharma Satya and Wahana Pronatural

-0.61

Correlation Coefficient

Dharma Satya  Wahana Pronatural

Excellent diversification

The 3 months correlation between Dharma and Wahana is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Dharma Satya Nusantara and Wahana Pronatural in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wahana Pronatural 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 Wahana Pronatural. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wahana Pronatural has no effect on the direction of Dharma Satya i.e., Dharma Satya and Wahana Pronatural go up and down completely randomly.

Pair Corralation between Dharma Satya and Wahana Pronatural

Assuming the 90 days trading horizon Dharma Satya Nusantara is expected to generate 1.92 times more return on investment than Wahana Pronatural. However, Dharma Satya is 1.92 times more volatile than Wahana Pronatural. It trades about 0.12 of its potential returns per unit of risk. Wahana Pronatural is currently generating about -0.05 per unit of risk. If you would invest  82,500  in Dharma Satya Nusantara on September 14, 2024 and sell it today you would earn a total of  23,000  from holding Dharma Satya Nusantara or generate 27.88% return on investment over 90 days.

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

Dharma Satya Nusantara  vs.  Wahana Pronatural

Dharma Satya Nusantara

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Dharma Satya Nusantara are ranked lower than 9 (%) 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.

Wahana Pronatural

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Wahana Pronatural 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 Wahana Pronatural

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

The idea behind Dharma Satya Nusantara and Wahana Pronatural 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..