Correlation Between Darma Henwa and Indika Energy
Can any of the company-specific risk be diversified away by investing in both Darma Henwa and Indika Energy 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 Indika Energy 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 Indika Energy Tbk, you can compare the effects of market volatilities on Darma Henwa and Indika Energy 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 Indika Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Darma Henwa and Indika Energy.
Diversification Opportunities for Darma Henwa and Indika Energy
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Darma and Indika is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Darma Henwa Tbk and Indika Energy Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Indika Energy Tbk 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 Indika Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Indika Energy Tbk has no effect on the direction of Darma Henwa i.e., Darma Henwa and Indika Energy go up and down completely randomly.
Pair Corralation between Darma Henwa and Indika Energy
Assuming the 90 days trading horizon Darma Henwa Tbk is expected to generate 1.38 times more return on investment than Indika Energy. However, Darma Henwa is 1.38 times more volatile than Indika Energy Tbk. It trades about 0.06 of its potential returns per unit of risk. Indika Energy Tbk is currently generating about -0.02 per unit of risk. If you would invest 5,300 in Darma Henwa Tbk on August 31, 2024 and sell it today you would earn a total of 5,200 from holding Darma Henwa Tbk or generate 98.11% 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. Indika Energy Tbk
Performance |
| Timeline |
| Darma Henwa Tbk |
| Indika Energy Tbk |
Darma Henwa and Indika Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Darma Henwa and Indika Energy
The main advantage of trading using opposite Darma Henwa and Indika Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Darma Henwa position performs unexpectedly, Indika Energy 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 Indika Energy will offset losses from the drop in Indika Energy's long position.| Darma Henwa vs. Perusahaan Gas Negara | Darma Henwa vs. Vale Indonesia Tbk | Darma Henwa vs. Telkom Indonesia Tbk | Darma Henwa vs. Mitra Pinasthika Mustika |
| Indika Energy vs. Indo Tambangraya Megah | Indika Energy vs. Adaro Energy Tbk | Indika Energy vs. Medco Energi Internasional | Indika Energy vs. Vale Indonesia Tbk |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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