Correlation Between Mitra International and Darma Henwa
Can any of the company-specific risk be diversified away by investing in both Mitra International 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 Mitra International and Darma Henwa into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mitra International Resources and Darma Henwa Tbk, you can compare the effects of market volatilities on Mitra International 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 Mitra International with a short position of Darma Henwa. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mitra International and Darma Henwa.
Diversification Opportunities for Mitra International and Darma Henwa
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Mitra and Darma is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Mitra International Resources 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 Mitra International 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 Mitra International Resources 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 Mitra International i.e., Mitra International and Darma Henwa go up and down completely randomly.
Pair Corralation between Mitra International and Darma Henwa
Assuming the 90 days trading horizon Mitra International Resources is expected to under-perform the Darma Henwa. In addition to that, Mitra International is 1.78 times more volatile than Darma Henwa Tbk. It trades about -0.09 of its total potential returns per unit of risk. Darma Henwa Tbk is currently generating about 0.27 per unit of volatility. If you would invest 11,100 in Darma Henwa Tbk on November 29, 2024 and sell it today you would earn a total of 2,700 from holding Darma Henwa Tbk or generate 24.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mitra International Resources vs. Darma Henwa Tbk
Performance |
| Timeline |
| Mitra International |
| Darma Henwa Tbk |
Mitra International and Darma Henwa Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mitra International and Darma Henwa
The main advantage of trading using opposite Mitra International and Darma Henwa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mitra International 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.| Mitra International vs. Darma Henwa Tbk | Mitra International vs. Berlian Laju Tanker | Mitra International vs. Bakrie Sumatera Plantations | Mitra International vs. Bakrieland Development 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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