Correlation Between Darma Henwa and Communication Cable
Can any of the company-specific risk be diversified away by investing in both Darma Henwa and Communication Cable 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 Communication Cable 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 Communication Cable Systems, you can compare the effects of market volatilities on Darma Henwa and Communication Cable 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 Communication Cable. Check out your portfolio center. Please also check ongoing floating volatility patterns of Darma Henwa and Communication Cable.
Diversification Opportunities for Darma Henwa and Communication Cable
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Darma and Communication is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Darma Henwa Tbk and Communication Cable Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Communication Cable 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 Communication Cable. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Communication Cable has no effect on the direction of Darma Henwa i.e., Darma Henwa and Communication Cable go up and down completely randomly.
Pair Corralation between Darma Henwa and Communication Cable
Assuming the 90 days trading horizon Darma Henwa Tbk is expected to generate 1.11 times more return on investment than Communication Cable. However, Darma Henwa is 1.11 times more volatile than Communication Cable Systems. It trades about 0.22 of its potential returns per unit of risk. Communication Cable Systems is currently generating about 0.12 per unit of risk. If you would invest 9,000 in Darma Henwa Tbk on August 26, 2024 and sell it today you would earn a total of 2,900 from holding Darma Henwa Tbk or generate 32.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Darma Henwa Tbk vs. Communication Cable Systems
Performance |
| Timeline |
| Darma Henwa Tbk |
| Communication Cable |
Darma Henwa and Communication Cable Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Darma Henwa and Communication Cable
The main advantage of trading using opposite Darma Henwa and Communication Cable positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Darma Henwa position performs unexpectedly, Communication Cable 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 Communication Cable will offset losses from the drop in Communication Cable'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 |
| Communication Cable vs. Hartadinata Abadi Tbk | Communication Cable vs. Estika Tata Tiara | Communication Cable vs. Garudafood Putra Putri | Communication Cable vs. PT Indonesia Kendaraan |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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