Correlation Between Darmi Bersaudara and Agro Yasa

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

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

Diversification Opportunities for Darmi Bersaudara and Agro Yasa

0.0

Correlation Coefficient

Darmi Bersaudara  Agro Yasa

Pay attention - limited upside

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

Pair Corralation between Darmi Bersaudara and Agro Yasa

If you would invest  6,700  in Agro Yasa Lestari on September 28, 2024 and sell it today you would earn a total of  7,400  from holding Agro Yasa Lestari or generate 110.45% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Darmi Bersaudara Tbk  vs.  Agro Yasa Lestari

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.

Agro Yasa Lestari

Risk-Adjusted Performance

12 of 100

Good

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

Pair Trading with Darmi Bersaudara and Agro Yasa

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

The idea behind Darmi Bersaudara Tbk and Agro Yasa Lestari 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.