Correlation Between PT Dewi and Imago Mulia

Can any of the company-specific risk be diversified away by investing in both PT Dewi and Imago Mulia 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 PT Dewi and Imago Mulia into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between PT Dewi Shri and Imago Mulia Persada, you can compare the effects of market volatilities on PT Dewi and Imago Mulia 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 PT Dewi with a short position of Imago Mulia. Check out your portfolio center. Please also check ongoing floating volatility patterns of PT Dewi and Imago Mulia.

Diversification Opportunities for PT Dewi and Imago Mulia

0.55

Correlation Coefficient

PT Dewi  Imago Mulia

Very weak diversification

The 3 months correlation between DEWI and Imago is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding PT Dewi Shri and Imago Mulia Persada in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Imago Mulia Persada and PT Dewi 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 PT Dewi Shri are associated (or correlated) with Imago Mulia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Imago Mulia Persada has no effect on the direction of PT Dewi i.e., PT Dewi and Imago Mulia go up and down completely randomly.

Pair Corralation between PT Dewi and Imago Mulia

Assuming the 90 days trading horizon PT Dewi is expected to generate 4.35 times less return on investment than Imago Mulia. But when comparing it to its historical volatility, PT Dewi Shri is 2.08 times less risky than Imago Mulia. It trades about 0.06 of its potential returns per unit of risk. Imago Mulia Persada is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  8,600  in Imago Mulia Persada on December 29, 2024 and sell it today you would earn a total of  2,800  from holding Imago Mulia Persada or generate 32.56% return on investment over 90 days.

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

PT Dewi Shri  vs.  Imago Mulia Persada

PT Dewi Shri

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in PT Dewi Shri are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, PT Dewi may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Imago Mulia Persada

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Imago Mulia Persada are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Imago Mulia disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with PT Dewi and Imago Mulia

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

The idea behind PT Dewi Shri and Imago Mulia Persada 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.