Correlation Between Darma Henwa and Elang Mahkota
Can any of the company-specific risk be diversified away by investing in both Darma Henwa and Elang Mahkota 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 Elang Mahkota 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 Elang Mahkota Teknologi, you can compare the effects of market volatilities on Darma Henwa and Elang Mahkota 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 Elang Mahkota. Check out your portfolio center. Please also check ongoing floating volatility patterns of Darma Henwa and Elang Mahkota.
Diversification Opportunities for Darma Henwa and Elang Mahkota
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Darma and Elang is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Darma Henwa Tbk and Elang Mahkota Teknologi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elang Mahkota Teknologi 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 Elang Mahkota. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Elang Mahkota Teknologi has no effect on the direction of Darma Henwa i.e., Darma Henwa and Elang Mahkota go up and down completely randomly.
Pair Corralation between Darma Henwa and Elang Mahkota
Assuming the 90 days trading horizon Darma Henwa Tbk is expected to generate 1.31 times more return on investment than Elang Mahkota. However, Darma Henwa is 1.31 times more volatile than Elang Mahkota Teknologi. It trades about 0.07 of its potential returns per unit of risk. Elang Mahkota Teknologi is currently generating about -0.01 per unit of risk. If you would invest 5,000 in Darma Henwa Tbk on September 1, 2024 and sell it today you would earn a total of 5,600 from holding Darma Henwa Tbk or generate 112.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.72% |
| Values | Daily Returns |
Darma Henwa Tbk vs. Elang Mahkota Teknologi
Performance |
| Timeline |
| Darma Henwa Tbk |
| Elang Mahkota Teknologi |
Darma Henwa and Elang Mahkota Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Darma Henwa and Elang Mahkota
The main advantage of trading using opposite Darma Henwa and Elang Mahkota positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Darma Henwa position performs unexpectedly, Elang Mahkota 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 Elang Mahkota will offset losses from the drop in Elang Mahkota'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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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