Correlation Between Merdeka Copper and Darya Varia

Can any of the company-specific risk be diversified away by investing in both Merdeka Copper and Darya Varia 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 Merdeka Copper and Darya Varia into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Merdeka Copper Gold and Darya Varia Laboratoria Tbk, you can compare the effects of market volatilities on Merdeka Copper and Darya Varia 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 Merdeka Copper with a short position of Darya Varia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merdeka Copper and Darya Varia.

Diversification Opportunities for Merdeka Copper and Darya Varia

0.29

Correlation Coefficient

Merdeka Copper  Darya Varia

Modest diversification

The 3 months correlation between Merdeka and Darya is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Merdeka Copper Gold and Darya Varia Laboratoria Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Darya Varia Laboratoria and Merdeka Copper 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 Merdeka Copper Gold are associated (or correlated) with Darya Varia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Darya Varia Laboratoria has no effect on the direction of Merdeka Copper i.e., Merdeka Copper and Darya Varia go up and down completely randomly.

Pair Corralation between Merdeka Copper and Darya Varia

Assuming the 90 days trading horizon Merdeka Copper Gold is expected to under-perform the Darya Varia. In addition to that, Merdeka Copper is 2.37 times more volatile than Darya Varia Laboratoria Tbk. It trades about -0.2 of its total potential returns per unit of risk. Darya Varia Laboratoria Tbk is currently generating about -0.02 per unit of volatility. If you would invest  165,972  in Darya Varia Laboratoria Tbk on September 22, 2024 and sell it today you would lose (2,472) from holding Darya Varia Laboratoria Tbk or give up 1.49% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.46%
Values	Daily Returns

Merdeka Copper Gold  vs.  Darya Varia Laboratoria Tbk

Merdeka Copper Gold

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Merdeka Copper Gold 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.

Darya Varia Laboratoria

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Darya Varia Laboratoria Tbk has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Darya Varia 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 Merdeka Copper and Darya Varia

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

The idea behind Merdeka Copper Gold and Darya Varia Laboratoria 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.