Correlation Between Dharma Satya and Sawit Sumbermas
Can any of the company-specific risk be diversified away by investing in both Dharma Satya and Sawit Sumbermas 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 Dharma Satya and Sawit Sumbermas into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dharma Satya Nusantara and Sawit Sumbermas Sarana, you can compare the effects of market volatilities on Dharma Satya and Sawit Sumbermas 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 Dharma Satya with a short position of Sawit Sumbermas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dharma Satya and Sawit Sumbermas.
Diversification Opportunities for Dharma Satya and Sawit Sumbermas
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Dharma and Sawit is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Dharma Satya Nusantara and Sawit Sumbermas Sarana in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sawit Sumbermas Sarana and Dharma Satya 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 Dharma Satya Nusantara are associated (or correlated) with Sawit Sumbermas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sawit Sumbermas Sarana has no effect on the direction of Dharma Satya i.e., Dharma Satya and Sawit Sumbermas go up and down completely randomly.
Pair Corralation between Dharma Satya and Sawit Sumbermas
Assuming the 90 days trading horizon Dharma Satya is expected to generate 1.7 times less return on investment than Sawit Sumbermas. But when comparing it to its historical volatility, Dharma Satya Nusantara is 1.56 times less risky than Sawit Sumbermas. It trades about 0.13 of its potential returns per unit of risk. Sawit Sumbermas Sarana is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 105,500 in Sawit Sumbermas Sarana on October 21, 2024 and sell it today you would earn a total of 15,000 from holding Sawit Sumbermas Sarana or generate 14.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dharma Satya Nusantara vs. Sawit Sumbermas Sarana
Performance |
| Timeline |
| Dharma Satya Nusantara |
| Sawit Sumbermas Sarana |
Dharma Satya and Sawit Sumbermas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dharma Satya and Sawit Sumbermas
The main advantage of trading using opposite Dharma Satya and Sawit Sumbermas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dharma Satya position performs unexpectedly, Sawit Sumbermas 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 Sawit Sumbermas will offset losses from the drop in Sawit Sumbermas' long position.| Dharma Satya vs. Delta Djakarta Tbk | Dharma Satya vs. Merck Tbk | Dharma Satya vs. Mayora Indah Tbk | Dharma Satya vs. Ultra Jaya Milk |
| Sawit Sumbermas vs. Delta Djakarta Tbk | Sawit Sumbermas vs. Merck Tbk | Sawit Sumbermas vs. Mayora Indah Tbk | Sawit Sumbermas vs. Ultra Jaya Milk |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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