Correlation Between Kino Indonesia and Dharma Satya

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

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

Diversification Opportunities for Kino Indonesia and Dharma Satya

-0.3

Correlation Coefficient

Kino Indonesia  Dharma Satya

Very good diversification

The 3 months correlation between Kino and Dharma is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Kino Indonesia Tbk and Dharma Satya Nusantara in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dharma Satya Nusantara and Kino Indonesia 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 Kino Indonesia Tbk are associated (or correlated) with Dharma Satya. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dharma Satya Nusantara has no effect on the direction of Kino Indonesia i.e., Kino Indonesia and Dharma Satya go up and down completely randomly.

Pair Corralation between Kino Indonesia and Dharma Satya

Assuming the 90 days trading horizon Kino Indonesia is expected to generate 9.44 times less return on investment than Dharma Satya. But when comparing it to its historical volatility, Kino Indonesia Tbk is 2.75 times less risky than Dharma Satya. It trades about 0.02 of its potential returns per unit of risk. Dharma Satya Nusantara is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  103,000  in Dharma Satya Nusantara on October 15, 2024 and sell it today you would earn a total of  4,500  from holding Dharma Satya Nusantara or generate 4.37% return on investment over 90 days.

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

Kino Indonesia Tbk  vs.  Dharma Satya Nusantara

Kino Indonesia Tbk

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kino Indonesia 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.

Dharma Satya Nusantara

Risk-Adjusted Performance

0 of 100

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 quite persistent forward-looking signals, Dharma Satya 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 Kino Indonesia and Dharma Satya

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

The idea behind Kino Indonesia Tbk and Dharma Satya Nusantara 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.