Correlation Between Sumber Tani and Dayamitra Telekomunikasi

Can any of the company-specific risk be diversified away by investing in both Sumber Tani and Dayamitra Telekomunikasi 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 Sumber Tani and Dayamitra Telekomunikasi into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Sumber Tani Agung and Dayamitra Telekomunikasi PT, you can compare the effects of market volatilities on Sumber Tani and Dayamitra Telekomunikasi 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 Sumber Tani with a short position of Dayamitra Telekomunikasi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sumber Tani and Dayamitra Telekomunikasi.

Diversification Opportunities for Sumber Tani and Dayamitra Telekomunikasi

-0.3

Correlation Coefficient

Sumber Tani  Dayamitra Telekomunikasi

Very good diversification

The 3 months correlation between Sumber and Dayamitra is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Sumber Tani Agung and Dayamitra Telekomunikasi PT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dayamitra Telekomunikasi and Sumber Tani 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 Sumber Tani Agung are associated (or correlated) with Dayamitra Telekomunikasi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dayamitra Telekomunikasi has no effect on the direction of Sumber Tani i.e., Sumber Tani and Dayamitra Telekomunikasi go up and down completely randomly.

Pair Corralation between Sumber Tani and Dayamitra Telekomunikasi

Assuming the 90 days trading horizon Sumber Tani is expected to generate 2.46 times less return on investment than Dayamitra Telekomunikasi. But when comparing it to its historical volatility, Sumber Tani Agung is 1.19 times less risky than Dayamitra Telekomunikasi. It trades about 0.02 of its potential returns per unit of risk. Dayamitra Telekomunikasi PT is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  65,500  in Dayamitra Telekomunikasi PT on September 14, 2024 and sell it today you would earn a total of  2,500  from holding Dayamitra Telekomunikasi PT or generate 3.82% return on investment over 90 days.

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

Sumber Tani Agung  vs.  Dayamitra Telekomunikasi PT

Sumber Tani Agung

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Sumber Tani Agung are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent forward-looking signals, Sumber Tani is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Dayamitra Telekomunikasi

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Dayamitra Telekomunikasi PT are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent forward-looking signals, Dayamitra Telekomunikasi 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 Sumber Tani and Dayamitra Telekomunikasi

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

The idea behind Sumber Tani Agung and Dayamitra Telekomunikasi PT 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.