Correlation Between Diamond Citra and Pratama Widya

Can any of the company-specific risk be diversified away by investing in both Diamond Citra and Pratama Widya 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 Diamond Citra and Pratama Widya into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Diamond Citra Propertindo and Pratama Widya Tbk, you can compare the effects of market volatilities on Diamond Citra and Pratama Widya 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 Diamond Citra with a short position of Pratama Widya. Check out your portfolio center. Please also check ongoing floating volatility patterns of Diamond Citra and Pratama Widya.

Diversification Opportunities for Diamond Citra and Pratama Widya

-0.26

Correlation Coefficient

Diamond Citra  Pratama Widya

Very good diversification

The 3 months correlation between Diamond and Pratama is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Diamond Citra Propertindo and Pratama Widya Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pratama Widya Tbk and Diamond Citra 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 Diamond Citra Propertindo are associated (or correlated) with Pratama Widya. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pratama Widya Tbk has no effect on the direction of Diamond Citra i.e., Diamond Citra and Pratama Widya go up and down completely randomly.

Pair Corralation between Diamond Citra and Pratama Widya

Assuming the 90 days trading horizon Diamond Citra Propertindo is expected to generate 12.77 times more return on investment than Pratama Widya. However, Diamond Citra is 12.77 times more volatile than Pratama Widya Tbk. It trades about 0.23 of its potential returns per unit of risk. Pratama Widya Tbk is currently generating about -0.47 per unit of risk. If you would invest  700.00  in Diamond Citra Propertindo on October 9, 2024 and sell it today you would earn a total of  200.00  from holding Diamond Citra Propertindo or generate 28.57% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	94.44%
Values	Daily Returns

Diamond Citra Propertindo  vs.  Pratama Widya Tbk

Diamond Citra Propertindo

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Diamond Citra Propertindo are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Diamond Citra disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pratama Widya Tbk

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pratama Widya Tbk has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's forward-looking signals remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with Diamond Citra and Pratama Widya

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

The idea behind Diamond Citra Propertindo and Pratama Widya 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.