Correlation Between Kirana Megatara and Dana Brata

Can any of the company-specific risk be diversified away by investing in both Kirana Megatara and Dana Brata 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 Kirana Megatara and Dana Brata into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Kirana Megatara Tbk and Dana Brata Luhur, you can compare the effects of market volatilities on Kirana Megatara and Dana Brata 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 Kirana Megatara with a short position of Dana Brata. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kirana Megatara and Dana Brata.

Diversification Opportunities for Kirana Megatara and Dana Brata

-0.55

Correlation Coefficient

Kirana Megatara  Dana Brata

Excellent diversification

The 3 months correlation between Kirana and Dana is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Kirana Megatara Tbk and Dana Brata Luhur in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dana Brata Luhur and Kirana Megatara 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 Kirana Megatara Tbk are associated (or correlated) with Dana Brata. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dana Brata Luhur has no effect on the direction of Kirana Megatara i.e., Kirana Megatara and Dana Brata go up and down completely randomly.

Pair Corralation between Kirana Megatara and Dana Brata

Assuming the 90 days trading horizon Kirana Megatara Tbk is expected to under-perform the Dana Brata. But the stock apears to be less risky and, when comparing its historical volatility, Kirana Megatara Tbk is 2.03 times less risky than Dana Brata. The stock trades about -0.03 of its potential returns per unit of risk. The Dana Brata Luhur is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  62,500  in Dana Brata Luhur on December 30, 2024 and sell it today you would earn a total of  9,000  from holding Dana Brata Luhur or generate 14.4% return on investment over 90 days.

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

Kirana Megatara Tbk  vs.  Dana Brata Luhur

Kirana Megatara Tbk

Risk-Adjusted Performance

Very Weak

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

Dana Brata Luhur

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Dana Brata Luhur are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Dana Brata disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Kirana Megatara and Dana Brata

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

The idea behind Kirana Megatara Tbk and Dana Brata Luhur 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.