Correlation Between Dharma Polimetal and Ciptadana Asset

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

Diversification Opportunities for Dharma Polimetal and Ciptadana Asset

-0.18

Correlation Coefficient

Dharma Polimetal  Ciptadana Asset

Good diversification

The 3 months correlation between Dharma and Ciptadana is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Dharma Polimetal Tbk and Ciptadana Asset Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ciptadana Asset Mana 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 Ciptadana Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ciptadana Asset Mana has no effect on the direction of Dharma Polimetal i.e., Dharma Polimetal and Ciptadana Asset go up and down completely randomly.

Pair Corralation between Dharma Polimetal and Ciptadana Asset

Assuming the 90 days trading horizon Dharma Polimetal Tbk is expected to under-perform the Ciptadana Asset. But the stock apears to be less risky and, when comparing its historical volatility, Dharma Polimetal Tbk is 1.62 times less risky than Ciptadana Asset. The stock trades about -0.08 of its potential returns per unit of risk. The Ciptadana Asset Management is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  5,823  in Ciptadana Asset Management on August 31, 2024 and sell it today you would lose (23.00) from holding Ciptadana Asset Management or give up 0.39% of portfolio value over 90 days.

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

Dharma Polimetal Tbk  vs.  Ciptadana Asset Management

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 latest conflicting performance, the Stock's forward-looking signals remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Ciptadana Asset Mana

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ciptadana Asset Management has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Ciptadana Asset 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 Ciptadana Asset

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

The idea behind Dharma Polimetal Tbk and Ciptadana Asset Management 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.