Correlation Between Exploitasi Energi and Duta Pertiwi

Can any of the company-specific risk be diversified away by investing in both Exploitasi Energi and Duta Pertiwi 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 Exploitasi Energi and Duta Pertiwi into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Exploitasi Energi Indonesia and Duta Pertiwi Nusantara, you can compare the effects of market volatilities on Exploitasi Energi and Duta Pertiwi 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 Exploitasi Energi with a short position of Duta Pertiwi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Exploitasi Energi and Duta Pertiwi.

Diversification Opportunities for Exploitasi Energi and Duta Pertiwi

-0.39

Correlation Coefficient

Exploitasi Energi  Duta Pertiwi

Very good diversification

The 3 months correlation between Exploitasi and Duta is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Exploitasi Energi Indonesia and Duta Pertiwi Nusantara in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Duta Pertiwi Nusantara and Exploitasi Energi 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 Exploitasi Energi Indonesia are associated (or correlated) with Duta Pertiwi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Duta Pertiwi Nusantara has no effect on the direction of Exploitasi Energi i.e., Exploitasi Energi and Duta Pertiwi go up and down completely randomly.

Pair Corralation between Exploitasi Energi and Duta Pertiwi

Assuming the 90 days trading horizon Exploitasi Energi Indonesia is expected to generate 10.09 times more return on investment than Duta Pertiwi. However, Exploitasi Energi is 10.09 times more volatile than Duta Pertiwi Nusantara. It trades about 0.15 of its potential returns per unit of risk. Duta Pertiwi Nusantara is currently generating about -0.06 per unit of risk. If you would invest  700.00  in Exploitasi Energi Indonesia on September 14, 2024 and sell it today you would earn a total of  600.00  from holding Exploitasi Energi Indonesia or generate 85.71% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Exploitasi Energi Indonesia  vs.  Duta Pertiwi Nusantara

Exploitasi Energi

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Exploitasi Energi Indonesia are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Exploitasi Energi disclosed solid returns over the last few months and may actually be approaching a breakup point.

Duta Pertiwi Nusantara

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Duta Pertiwi Nusantara has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Duta Pertiwi is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Exploitasi Energi and Duta Pertiwi

The main advantage of trading using opposite Exploitasi Energi and Duta Pertiwi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Exploitasi Energi position performs unexpectedly, Duta Pertiwi 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 Duta Pertiwi will offset losses from the drop in Duta Pertiwi's long position.

The idea behind Exploitasi Energi Indonesia and Duta Pertiwi Nusantara pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.