Correlation Between Dharma Polimetal and Avia Avian

Can any of the company-specific risk be diversified away by investing in both Dharma Polimetal and Avia Avian 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 Avia Avian 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 Avia Avian PT, you can compare the effects of market volatilities on Dharma Polimetal and Avia Avian 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 Avia Avian. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dharma Polimetal and Avia Avian.

Diversification Opportunities for Dharma Polimetal and Avia Avian

0.5

Correlation Coefficient

Dharma Polimetal  Avia Avian

Very weak diversification

The 3 months correlation between Dharma and Avia is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Dharma Polimetal Tbk and Avia Avian PT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Avia Avian PT 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 Avia Avian. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Avia Avian PT has no effect on the direction of Dharma Polimetal i.e., Dharma Polimetal and Avia Avian go up and down completely randomly.

Pair Corralation between Dharma Polimetal and Avia Avian

Assuming the 90 days trading horizon Dharma Polimetal is expected to generate 1.01 times less return on investment than Avia Avian. But when comparing it to its historical volatility, Dharma Polimetal Tbk is 1.5 times less risky than Avia Avian. It trades about 0.03 of its potential returns per unit of risk. Avia Avian PT is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  40,000  in Avia Avian PT on December 30, 2024 and sell it today you would earn a total of  600.00  from holding Avia Avian PT or generate 1.5% return on investment over 90 days.

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

Dharma Polimetal Tbk  vs.  Avia Avian PT

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 2 (%) 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.

Avia Avian PT

Risk-Adjusted Performance

Weak

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

Pair Trading with Dharma Polimetal and Avia Avian

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

The idea behind Dharma Polimetal Tbk and Avia Avian PT 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.