Correlation Between Bakrieland Development and Darma Henwa
Can any of the company-specific risk be diversified away by investing in both Bakrieland Development and Darma Henwa 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 Bakrieland Development and Darma Henwa into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bakrieland Development Tbk and Darma Henwa Tbk, you can compare the effects of market volatilities on Bakrieland Development and Darma Henwa 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 Bakrieland Development with a short position of Darma Henwa. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bakrieland Development and Darma Henwa.
Diversification Opportunities for Bakrieland Development and Darma Henwa
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Bakrieland and Darma is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Bakrieland Development Tbk and Darma Henwa Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Darma Henwa Tbk and Bakrieland Development 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 Bakrieland Development Tbk are associated (or correlated) with Darma Henwa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Darma Henwa Tbk has no effect on the direction of Bakrieland Development i.e., Bakrieland Development and Darma Henwa go up and down completely randomly.
Pair Corralation between Bakrieland Development and Darma Henwa
Assuming the 90 days trading horizon Bakrieland Development Tbk is expected to under-perform the Darma Henwa. But the stock apears to be less risky and, when comparing its historical volatility, Bakrieland Development Tbk is 1.91 times less risky than Darma Henwa. The stock trades about -0.49 of its potential returns per unit of risk. The Darma Henwa Tbk is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 9,600 in Darma Henwa Tbk on August 28, 2024 and sell it today you would earn a total of 2,100 from holding Darma Henwa Tbk or generate 21.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bakrieland Development Tbk vs. Darma Henwa Tbk
Performance |
| Timeline |
| Bakrieland Development |
| Darma Henwa Tbk |
Bakrieland Development and Darma Henwa Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bakrieland Development and Darma Henwa
The main advantage of trading using opposite Bakrieland Development and Darma Henwa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bakrieland Development position performs unexpectedly, Darma Henwa 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 Darma Henwa will offset losses from the drop in Darma Henwa's long position.| Bakrieland Development vs. Bakrie Brothers Tbk | Bakrieland Development vs. Bakrie Sumatera Plantations | Bakrieland Development vs. Energi Mega Persada | Bakrieland Development vs. Darma Henwa Tbk |
| Darma Henwa vs. Bakrieland Development Tbk | Darma Henwa vs. Energi Mega Persada | Darma Henwa vs. Bakrie Brothers Tbk | Darma Henwa vs. Bakrie Sumatera Plantations |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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