Correlation Between Fortune Indonesia and Darmi Bersaudara

Can any of the company-specific risk be diversified away by investing in both Fortune Indonesia and Darmi Bersaudara 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 Fortune Indonesia and Darmi Bersaudara into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Fortune Indonesia Tbk and Darmi Bersaudara Tbk, you can compare the effects of market volatilities on Fortune Indonesia and Darmi Bersaudara 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 Fortune Indonesia with a short position of Darmi Bersaudara. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fortune Indonesia and Darmi Bersaudara.

Diversification Opportunities for Fortune Indonesia and Darmi Bersaudara

0.0

Correlation Coefficient

Fortune Indonesia  Darmi Bersaudara

Pay attention - limited upside

The 3 months correlation between Fortune and Darmi is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Fortune Indonesia Tbk and Darmi Bersaudara Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Darmi Bersaudara Tbk and Fortune Indonesia 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 Fortune Indonesia Tbk are associated (or correlated) with Darmi Bersaudara. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Darmi Bersaudara Tbk has no effect on the direction of Fortune Indonesia i.e., Fortune Indonesia and Darmi Bersaudara go up and down completely randomly.

Pair Corralation between Fortune Indonesia and Darmi Bersaudara

If you would invest  292,000  in Fortune Indonesia Tbk on September 23, 2024 and sell it today you would earn a total of  87,000  from holding Fortune Indonesia Tbk or generate 29.79% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	98.46%
Values	Daily Returns

Fortune Indonesia Tbk  vs.  Darmi Bersaudara Tbk

Fortune Indonesia Tbk

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Fortune Indonesia Tbk are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Fortune Indonesia disclosed solid returns over the last few months and may actually be approaching a breakup point.

Darmi Bersaudara Tbk

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Darmi Bersaudara Tbk has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Darmi Bersaudara is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Fortune Indonesia and Darmi Bersaudara

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

The idea behind Fortune Indonesia Tbk and Darmi Bersaudara 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.