Correlation Between Dharma Polimetal and Era Media

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

Diversification Opportunities for Dharma Polimetal and Era Media

0.54

Correlation Coefficient

Dharma Polimetal  Era Media

Very weak diversification

The 3 months correlation between Dharma and Era is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Dharma Polimetal Tbk and Era Media Sejahtera in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Era Media Sejahtera 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 Era Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Era Media Sejahtera has no effect on the direction of Dharma Polimetal i.e., Dharma Polimetal and Era Media go up and down completely randomly.

Pair Corralation between Dharma Polimetal and Era Media

Assuming the 90 days trading horizon Dharma Polimetal Tbk is expected to generate 0.61 times more return on investment than Era Media. However, Dharma Polimetal Tbk is 1.63 times less risky than Era Media. It trades about 0.05 of its potential returns per unit of risk. Era Media Sejahtera is currently generating about -0.01 per unit of risk. If you would invest  55,265  in Dharma Polimetal Tbk on October 10, 2024 and sell it today you would earn a total of  37,735  from holding Dharma Polimetal Tbk or generate 68.28% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	85.9%
Values	Daily Returns

Dharma Polimetal Tbk  vs.  Era Media Sejahtera

Dharma Polimetal Tbk

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dharma Polimetal Tbk has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's forward-looking signals remain quite persistent which may send shares a bit higher in February 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Era Media Sejahtera

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Era Media Sejahtera has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Era Media is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Dharma Polimetal and Era Media

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

The idea behind Dharma Polimetal Tbk and Era Media Sejahtera 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 Commodity Directory module to find actively traded commodities issued by global exchanges.