Correlation Between Dimet Public and Sri Trang

Can any of the company-specific risk be diversified away by investing in both Dimet Public and Sri Trang 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 Dimet Public and Sri Trang into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Dimet Public and Sri Trang Agro Industry, you can compare the effects of market volatilities on Dimet Public and Sri Trang 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 Dimet Public with a short position of Sri Trang. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dimet Public and Sri Trang.

Diversification Opportunities for Dimet Public and Sri Trang

0.66

Correlation Coefficient

Dimet Public  Sri Trang

Poor diversification

The 3 months correlation between Dimet and Sri is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Dimet Public and Sri Trang Agro Industry in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sri Trang Agro and Dimet Public 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 Dimet Public are associated (or correlated) with Sri Trang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sri Trang Agro has no effect on the direction of Dimet Public i.e., Dimet Public and Sri Trang go up and down completely randomly.

Pair Corralation between Dimet Public and Sri Trang

Assuming the 90 days trading horizon Dimet Public is expected to under-perform the Sri Trang. In addition to that, Dimet Public is 4.53 times more volatile than Sri Trang Agro Industry. It trades about -0.06 of its total potential returns per unit of risk. Sri Trang Agro Industry is currently generating about -0.12 per unit of volatility. If you would invest  1,760  in Sri Trang Agro Industry on December 26, 2024 and sell it today you would lose (270.00) from holding Sri Trang Agro Industry or give up 15.34% of portfolio value over 90 days.

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

Dimet Public  vs.  Sri Trang Agro Industry

Dimet Public

Risk-Adjusted Performance

Very Weak

Over the last 90 days Dimet Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's fundamental drivers remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Sri Trang Agro

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sri Trang Agro Industry has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Dimet Public and Sri Trang

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

The idea behind Dimet Public and Sri Trang Agro Industry 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.