Correlation Between Hanjaya Mandala and Digital Mediatama

Can any of the company-specific risk be diversified away by investing in both Hanjaya Mandala and Digital Mediatama 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 Hanjaya Mandala and Digital Mediatama into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Hanjaya Mandala Sampoerna and Digital Mediatama Maxima, you can compare the effects of market volatilities on Hanjaya Mandala and Digital Mediatama 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 Hanjaya Mandala with a short position of Digital Mediatama. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hanjaya Mandala and Digital Mediatama.

Diversification Opportunities for Hanjaya Mandala and Digital Mediatama

-0.84

Correlation Coefficient

Hanjaya Mandala  Digital Mediatama

Pay attention - limited upside

The 3 months correlation between Hanjaya and Digital is -0.84. Overlapping area represents the amount of risk that can be diversified away by holding Hanjaya Mandala Sampoerna and Digital Mediatama Maxima in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Digital Mediatama Maxima and Hanjaya Mandala 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 Hanjaya Mandala Sampoerna are associated (or correlated) with Digital Mediatama. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Digital Mediatama Maxima has no effect on the direction of Hanjaya Mandala i.e., Hanjaya Mandala and Digital Mediatama go up and down completely randomly.

Pair Corralation between Hanjaya Mandala and Digital Mediatama

Assuming the 90 days trading horizon Hanjaya Mandala Sampoerna is expected to under-perform the Digital Mediatama. But the stock apears to be less risky and, when comparing its historical volatility, Hanjaya Mandala Sampoerna is 2.42 times less risky than Digital Mediatama. The stock trades about -0.05 of its potential returns per unit of risk. The Digital Mediatama Maxima is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  12,600  in Digital Mediatama Maxima on September 3, 2024 and sell it today you would earn a total of  10,600  from holding Digital Mediatama Maxima or generate 84.13% return on investment over 90 days.

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

Hanjaya Mandala Sampoerna  vs.  Digital Mediatama Maxima

Hanjaya Mandala Sampoerna

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hanjaya Mandala Sampoerna 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.

Digital Mediatama Maxima

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Digital Mediatama Maxima are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Digital Mediatama disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Hanjaya Mandala and Digital Mediatama

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

The idea behind Hanjaya Mandala Sampoerna and Digital Mediatama Maxima 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.