Correlation Between Central Proteina and Darma Henwa

Can any of the company-specific risk be diversified away by investing in both Central Proteina 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 Central Proteina and Darma Henwa into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Central Proteina Prima and Darma Henwa Tbk, you can compare the effects of market volatilities on Central Proteina 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 Central Proteina with a short position of Darma Henwa. Check out your portfolio center. Please also check ongoing floating volatility patterns of Central Proteina and Darma Henwa.

Diversification Opportunities for Central Proteina and Darma Henwa

0.02

Correlation Coefficient

Central Proteina  Darma Henwa

Significant diversification

The 3 months correlation between Central and Darma is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Central Proteina Prima 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 Central Proteina 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 Central Proteina Prima 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 Central Proteina i.e., Central Proteina and Darma Henwa go up and down completely randomly.

Pair Corralation between Central Proteina and Darma Henwa

Assuming the 90 days trading horizon Central Proteina is expected to generate 27.21 times less return on investment than Darma Henwa. But when comparing it to its historical volatility, Central Proteina Prima is 1.54 times less risky than Darma Henwa. It trades about 0.0 of its potential returns per unit of risk. Darma Henwa Tbk is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  5,400  in Darma Henwa Tbk on October 7, 2024 and sell it today you would earn a total of  6,400  from holding Darma Henwa Tbk or generate 118.52% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	99.79%
Values	Daily Returns

Central Proteina Prima  vs.  Darma Henwa Tbk

Central Proteina Prima

Risk-Adjusted Performance

0 of 100

Very Weak

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

Darma Henwa Tbk

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Darma Henwa Tbk are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Darma Henwa disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Central Proteina and Darma Henwa

The main advantage of trading using opposite Central Proteina and Darma Henwa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Central Proteina 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.

The idea behind Central Proteina Prima and Darma Henwa Tbk 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..