Correlation Between Dharma Satya and Sumber Alfaria

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

By analyzing existing cross correlation between Dharma Satya Nusantara and Sumber Alfaria Trijaya, you can compare the effects of market volatilities on Dharma Satya and Sumber Alfaria 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 Satya with a short position of Sumber Alfaria. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dharma Satya and Sumber Alfaria.

Diversification Opportunities for Dharma Satya and Sumber Alfaria

0.35

Correlation Coefficient

Dharma Satya  Sumber Alfaria

Weak diversification

The 3 months correlation between Dharma and Sumber is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Dharma Satya Nusantara and Sumber Alfaria Trijaya in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sumber Alfaria Trijaya and Dharma Satya 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 Satya Nusantara are associated (or correlated) with Sumber Alfaria. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sumber Alfaria Trijaya has no effect on the direction of Dharma Satya i.e., Dharma Satya and Sumber Alfaria go up and down completely randomly.

Pair Corralation between Dharma Satya and Sumber Alfaria

Assuming the 90 days trading horizon Dharma Satya Nusantara is expected to generate 1.17 times more return on investment than Sumber Alfaria. However, Dharma Satya is 1.17 times more volatile than Sumber Alfaria Trijaya. It trades about -0.09 of its potential returns per unit of risk. Sumber Alfaria Trijaya is currently generating about -0.14 per unit of risk. If you would invest  113,500  in Dharma Satya Nusantara on December 4, 2024 and sell it today you would lose (21,000) from holding Dharma Satya Nusantara or give up 18.5% of portfolio value over 90 days.

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

Dharma Satya Nusantara  vs.  Sumber Alfaria Trijaya

Dharma Satya Nusantara

Risk-Adjusted Performance

Very Weak

Over the last 90 days Dharma Satya Nusantara 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 forward-looking signals 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.

Sumber Alfaria Trijaya

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sumber Alfaria Trijaya 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 forward-looking signals 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 Dharma Satya and Sumber Alfaria

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

The idea behind Dharma Satya Nusantara and Sumber Alfaria Trijaya 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.