Correlation Between Trans Power and Dana Brata

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

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

Diversification Opportunities for Trans Power and Dana Brata

-0.21

Correlation Coefficient

Trans Power  Dana Brata

Very good diversification

The 3 months correlation between Trans and Dana is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Trans Power Marine and Dana Brata Luhur in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dana Brata Luhur and Trans Power 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 Trans Power Marine are associated (or correlated) with Dana Brata. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dana Brata Luhur has no effect on the direction of Trans Power i.e., Trans Power and Dana Brata go up and down completely randomly.

Pair Corralation between Trans Power and Dana Brata

Assuming the 90 days trading horizon Trans Power Marine is expected to under-perform the Dana Brata. In addition to that, Trans Power is 2.42 times more volatile than Dana Brata Luhur. It trades about -0.09 of its total potential returns per unit of risk. Dana Brata Luhur is currently generating about -0.08 per unit of volatility. If you would invest  65,939  in Dana Brata Luhur on September 19, 2024 and sell it today you would lose (3,439) from holding Dana Brata Luhur or give up 5.22% of portfolio value over 90 days.

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

Trans Power Marine  vs.  Dana Brata Luhur

Trans Power Marine

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Trans Power Marine 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.

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.

Pair Trading with Trans Power and Dana Brata

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

The idea behind Trans Power Marine and Dana Brata Luhur 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.