Correlation Between Pt Pradiksi and Dharma Satya

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

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

Diversification Opportunities for Pt Pradiksi and Dharma Satya

-0.2

Correlation Coefficient

Pt Pradiksi  Dharma Satya

Good diversification

The 3 months correlation between PGUN and Dharma is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Pt Pradiksi Gunatama 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 Pt Pradiksi 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 Pt Pradiksi Gunatama 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 Pt Pradiksi i.e., Pt Pradiksi and Dharma Satya go up and down completely randomly.

Pair Corralation between Pt Pradiksi and Dharma Satya

Assuming the 90 days trading horizon Pt Pradiksi Gunatama is expected to generate 2.42 times more return on investment than Dharma Satya. However, Pt Pradiksi is 2.42 times more volatile than Dharma Satya Nusantara. It trades about 0.07 of its potential returns per unit of risk. Dharma Satya Nusantara is currently generating about -0.1 per unit of risk. If you would invest  42,400  in Pt Pradiksi Gunatama on December 29, 2024 and sell it today you would earn a total of  7,200  from holding Pt Pradiksi Gunatama or generate 16.98% return on investment over 90 days.

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

Pt Pradiksi Gunatama  vs.  Dharma Satya Nusantara

Pt Pradiksi Gunatama

Risk-Adjusted Performance

Modest

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

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.

Pair Trading with Pt Pradiksi and Dharma Satya

The main advantage of trading using opposite Pt Pradiksi and Dharma Satya positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pt Pradiksi 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 Pt Pradiksi Gunatama 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.