Correlation Between Titan Company and Duta Pertiwi

Can any of the company-specific risk be diversified away by investing in both Titan Company and Duta Pertiwi 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 Titan Company and Duta Pertiwi into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Titan Company Limited and Duta Pertiwi Tbk, you can compare the effects of market volatilities on Titan Company and Duta Pertiwi 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 Titan Company with a short position of Duta Pertiwi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Titan Company and Duta Pertiwi.

Diversification Opportunities for Titan Company and Duta Pertiwi

-0.69

Correlation Coefficient

Titan Company  Duta Pertiwi

Excellent diversification

The 3 months correlation between Titan and Duta is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Titan Company Limited and Duta Pertiwi Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Duta Pertiwi Tbk and Titan Company 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 Titan Company Limited are associated (or correlated) with Duta Pertiwi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Duta Pertiwi Tbk has no effect on the direction of Titan Company i.e., Titan Company and Duta Pertiwi go up and down completely randomly.

Pair Corralation between Titan Company and Duta Pertiwi

Assuming the 90 days trading horizon Titan Company Limited is expected to under-perform the Duta Pertiwi. But the stock apears to be less risky and, when comparing its historical volatility, Titan Company Limited is 1.76 times less risky than Duta Pertiwi. The stock trades about -0.12 of its potential returns per unit of risk. The Duta Pertiwi Tbk is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  392,000  in Duta Pertiwi Tbk on September 3, 2024 and sell it today you would earn a total of  5,000  from holding Duta Pertiwi Tbk or generate 1.28% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.41%
Values	Daily Returns

Titan Company Limited  vs.  Duta Pertiwi Tbk

Titan Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Titan Company Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Duta Pertiwi Tbk

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Duta Pertiwi Tbk are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent forward-looking signals, Duta Pertiwi 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 Titan Company and Duta Pertiwi

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

The idea behind Titan Company Limited and Duta Pertiwi Tbk 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.