Correlation Between Sawit Sumbermas and Dharma Satya

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

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

Diversification Opportunities for Sawit Sumbermas and Dharma Satya

-0.62

Correlation Coefficient

Sawit Sumbermas  Dharma Satya

Excellent diversification

The 3 months correlation between Sawit and Dharma is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Sawit Sumbermas Sarana 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 Sawit Sumbermas 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 Sawit Sumbermas Sarana 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 Sawit Sumbermas i.e., Sawit Sumbermas and Dharma Satya go up and down completely randomly.

Pair Corralation between Sawit Sumbermas and Dharma Satya

Assuming the 90 days trading horizon Sawit Sumbermas Sarana is expected to generate 2.1 times more return on investment than Dharma Satya. However, Sawit Sumbermas is 2.1 times more volatile than Dharma Satya Nusantara. It trades about 0.13 of its potential returns per unit of risk. Dharma Satya Nusantara is currently generating about -0.06 per unit of risk. If you would invest  126,500  in Sawit Sumbermas Sarana on November 29, 2024 and sell it today you would earn a total of  55,500  from holding Sawit Sumbermas Sarana or generate 43.87% return on investment over 90 days.

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

Sawit Sumbermas Sarana  vs.  Dharma Satya Nusantara

Sawit Sumbermas Sarana

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Sawit Sumbermas Sarana are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Sawit Sumbermas 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 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.

Pair Trading with Sawit Sumbermas and Dharma Satya

The main advantage of trading using opposite Sawit Sumbermas and Dharma Satya positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sawit Sumbermas 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 Sawit Sumbermas Sarana 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.