Correlation Between Darma Henwa and Bekasi Fajar
Can any of the company-specific risk be diversified away by investing in both Darma Henwa and Bekasi Fajar 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 Darma Henwa and Bekasi Fajar into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Darma Henwa Tbk and Bekasi Fajar Industrial, you can compare the effects of market volatilities on Darma Henwa and Bekasi Fajar 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 Darma Henwa with a short position of Bekasi Fajar. Check out your portfolio center. Please also check ongoing floating volatility patterns of Darma Henwa and Bekasi Fajar.
Diversification Opportunities for Darma Henwa and Bekasi Fajar
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between Darma and Bekasi is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Darma Henwa Tbk and Bekasi Fajar Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bekasi Fajar Industrial and Darma Henwa 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 Darma Henwa Tbk are associated (or correlated) with Bekasi Fajar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bekasi Fajar Industrial has no effect on the direction of Darma Henwa i.e., Darma Henwa and Bekasi Fajar go up and down completely randomly.
Pair Corralation between Darma Henwa and Bekasi Fajar
Assuming the 90 days trading horizon Darma Henwa Tbk is expected to generate 2.17 times more return on investment than Bekasi Fajar. However, Darma Henwa is 2.17 times more volatile than Bekasi Fajar Industrial. It trades about 0.25 of its potential returns per unit of risk. Bekasi Fajar Industrial is currently generating about -0.15 per unit of risk. If you would invest 11,100 in Darma Henwa Tbk on November 28, 2024 and sell it today you would earn a total of 2,400 from holding Darma Henwa Tbk or generate 21.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Darma Henwa Tbk vs. Bekasi Fajar Industrial
Performance |
| Timeline |
| Darma Henwa Tbk |
| Bekasi Fajar Industrial |
Darma Henwa and Bekasi Fajar Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Darma Henwa and Bekasi Fajar
The main advantage of trading using opposite Darma Henwa and Bekasi Fajar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Darma Henwa position performs unexpectedly, Bekasi Fajar 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 Bekasi Fajar will offset losses from the drop in Bekasi Fajar's long position.| Darma Henwa vs. Bakrieland Development Tbk | Darma Henwa vs. Energi Mega Persada | Darma Henwa vs. Bakrie Brothers Tbk | Darma Henwa vs. Bakrie Sumatera Plantations |
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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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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