Correlation Between Dana Brata and PT Indonesia

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

By analyzing existing cross correlation between Dana Brata Luhur and PT Indonesia Kendaraan, you can compare the effects of market volatilities on Dana Brata and PT Indonesia 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 Dana Brata with a short position of PT Indonesia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dana Brata and PT Indonesia.

Diversification Opportunities for Dana Brata and PT Indonesia

-0.3

Correlation Coefficient

Dana Brata  PT Indonesia

Very good diversification

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

Pair Corralation between Dana Brata and PT Indonesia

Assuming the 90 days trading horizon Dana Brata Luhur is expected to under-perform the PT Indonesia. But the stock apears to be less risky and, when comparing its historical volatility, Dana Brata Luhur is 2.86 times less risky than PT Indonesia. The stock trades about -0.2 of its potential returns per unit of risk. The PT Indonesia Kendaraan is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest  70,541  in PT Indonesia Kendaraan on September 21, 2024 and sell it today you would lose (2,041) from holding PT Indonesia Kendaraan or give up 2.89% of portfolio value over 90 days.

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

Dana Brata Luhur  vs.  PT Indonesia Kendaraan

Dana Brata Luhur

Risk-Adjusted Performance

0 of 100

Very Weak

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

PT Indonesia Kendaraan

Risk-Adjusted Performance

3 of 100

Insignificant

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

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

The idea behind Dana Brata Luhur and PT Indonesia Kendaraan 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.