Correlation Between Dharma Polimetal and Dunia Virtual

Can any of the company-specific risk be diversified away by investing in both Dharma Polimetal and Dunia Virtual 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 Dharma Polimetal and Dunia Virtual into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Dharma Polimetal Tbk and Dunia Virtual Online, you can compare the effects of market volatilities on Dharma Polimetal and Dunia Virtual 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 Dharma Polimetal with a short position of Dunia Virtual. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dharma Polimetal and Dunia Virtual.

Diversification Opportunities for Dharma Polimetal and Dunia Virtual

-0.31

Correlation Coefficient

Dharma Polimetal  Dunia Virtual

Very good diversification

The 3 months correlation between Dharma and Dunia is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Dharma Polimetal Tbk and Dunia Virtual Online in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dunia Virtual Online and Dharma Polimetal 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 Dharma Polimetal Tbk are associated (or correlated) with Dunia Virtual. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dunia Virtual Online has no effect on the direction of Dharma Polimetal i.e., Dharma Polimetal and Dunia Virtual go up and down completely randomly.

Pair Corralation between Dharma Polimetal and Dunia Virtual

Assuming the 90 days trading horizon Dharma Polimetal is expected to generate 58.4 times less return on investment than Dunia Virtual. But when comparing it to its historical volatility, Dharma Polimetal Tbk is 4.34 times less risky than Dunia Virtual. It trades about 0.02 of its potential returns per unit of risk. Dunia Virtual Online is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest  19,000  in Dunia Virtual Online on December 21, 2024 and sell it today you would earn a total of  24,400  from holding Dunia Virtual Online or generate 128.42% return on investment over 90 days.

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

Dharma Polimetal Tbk  vs.  Dunia Virtual Online

Dharma Polimetal Tbk

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Dharma Polimetal Tbk are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent forward-looking signals, Dharma Polimetal is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Dunia Virtual Online

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Dunia Virtual Online are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Dunia Virtual disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Dharma Polimetal and Dunia Virtual

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

The idea behind Dharma Polimetal Tbk and Dunia Virtual Online 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.

Check out your portfolio center.

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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.