Correlation Between Darma Henwa and Bhakti Multi
Can any of the company-specific risk be diversified away by investing in both Darma Henwa and Bhakti Multi 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 Bhakti Multi 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 Bhakti Multi Artha, you can compare the effects of market volatilities on Darma Henwa and Bhakti Multi 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 Bhakti Multi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Darma Henwa and Bhakti Multi.
Diversification Opportunities for Darma Henwa and Bhakti Multi
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Darma and Bhakti is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Darma Henwa Tbk and Bhakti Multi Artha in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bhakti Multi Artha 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 Bhakti Multi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bhakti Multi Artha has no effect on the direction of Darma Henwa i.e., Darma Henwa and Bhakti Multi go up and down completely randomly.
Pair Corralation between Darma Henwa and Bhakti Multi
Assuming the 90 days trading horizon Darma Henwa Tbk is expected to generate 3.55 times more return on investment than Bhakti Multi. However, Darma Henwa is 3.55 times more volatile than Bhakti Multi Artha. It trades about 0.16 of its potential returns per unit of risk. Bhakti Multi Artha is currently generating about -0.34 per unit of risk. If you would invest 9,800 in Darma Henwa Tbk on August 25, 2024 and sell it today you would earn a total of 2,100 from holding Darma Henwa Tbk or generate 21.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Darma Henwa Tbk vs. Bhakti Multi Artha
Performance |
| Timeline |
| Darma Henwa Tbk |
| Bhakti Multi Artha |
Darma Henwa and Bhakti Multi Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Darma Henwa and Bhakti Multi
The main advantage of trading using opposite Darma Henwa and Bhakti Multi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Darma Henwa position performs unexpectedly, Bhakti Multi 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 Bhakti Multi will offset losses from the drop in Bhakti Multi's long position.| Darma Henwa vs. Kedaung Indah Can | Darma Henwa vs. Langgeng Makmur Industri | Darma Henwa vs. Kabelindo Murni Tbk | Darma Henwa vs. Mustika Ratu Tbk |
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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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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