Correlation Between Alfa Energi and Duta Intidaya

Can any of the company-specific risk be diversified away by investing in both Alfa Energi and Duta Intidaya 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 Alfa Energi and Duta Intidaya into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Alfa Energi Investama and Duta Intidaya Tbk, you can compare the effects of market volatilities on Alfa Energi and Duta Intidaya 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 Alfa Energi with a short position of Duta Intidaya. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alfa Energi and Duta Intidaya.

Diversification Opportunities for Alfa Energi and Duta Intidaya

-0.89

Correlation Coefficient

Alfa Energi  Duta Intidaya

Pay attention - limited upside

The 3 months correlation between Alfa and Duta is -0.89. Overlapping area represents the amount of risk that can be diversified away by holding Alfa Energi Investama and Duta Intidaya Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Duta Intidaya Tbk and Alfa Energi 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 Alfa Energi Investama are associated (or correlated) with Duta Intidaya. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Duta Intidaya Tbk has no effect on the direction of Alfa Energi i.e., Alfa Energi and Duta Intidaya go up and down completely randomly.

Pair Corralation between Alfa Energi and Duta Intidaya

Assuming the 90 days trading horizon Alfa Energi Investama is expected to under-perform the Duta Intidaya. But the stock apears to be less risky and, when comparing its historical volatility, Alfa Energi Investama is 1.73 times less risky than Duta Intidaya. The stock trades about -0.11 of its potential returns per unit of risk. The Duta Intidaya Tbk is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  47,200  in Duta Intidaya Tbk on September 16, 2024 and sell it today you would earn a total of  15,800  from holding Duta Intidaya Tbk or generate 33.47% return on investment over 90 days.

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

Alfa Energi Investama  vs.  Duta Intidaya Tbk

Alfa Energi Investama

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Alfa Energi Investama has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's forward-looking signals remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Duta Intidaya Tbk

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Duta Intidaya Tbk are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Duta Intidaya disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Alfa Energi and Duta Intidaya

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

The idea behind Alfa Energi Investama and Duta Intidaya 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.