Correlation Between Titan Company and Damai Sejahtera

Can any of the company-specific risk be diversified away by investing in both Titan Company and Damai Sejahtera 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 Damai Sejahtera 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 Damai Sejahtera Abadi, you can compare the effects of market volatilities on Titan Company and Damai Sejahtera 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 Damai Sejahtera. Check out your portfolio center. Please also check ongoing floating volatility patterns of Titan Company and Damai Sejahtera.

Diversification Opportunities for Titan Company and Damai Sejahtera

0.48

Correlation Coefficient

Titan Company  Damai Sejahtera

Very weak diversification

The 3 months correlation between Titan and Damai is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Titan Company Limited and Damai Sejahtera Abadi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Damai Sejahtera Abadi 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 Damai Sejahtera. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Damai Sejahtera Abadi has no effect on the direction of Titan Company i.e., Titan Company and Damai Sejahtera go up and down completely randomly.

Pair Corralation between Titan Company and Damai Sejahtera

Assuming the 90 days trading horizon Titan Company Limited is expected to generate 0.37 times more return on investment than Damai Sejahtera. However, Titan Company Limited is 2.7 times less risky than Damai Sejahtera. It trades about -0.05 of its potential returns per unit of risk. Damai Sejahtera Abadi is currently generating about -0.03 per unit of risk. If you would invest  325,735  in Titan Company Limited on December 30, 2024 and sell it today you would lose (19,400) from holding Titan Company Limited or give up 5.96% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.24%
Values	Daily Returns

Titan Company Limited  vs.  Damai Sejahtera Abadi

Titan Limited

Risk-Adjusted Performance

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 very healthy basic indicators, Titan Company is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

Damai Sejahtera Abadi

Risk-Adjusted Performance

Very Weak

Over the last 90 days Damai Sejahtera Abadi 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 Titan Company and Damai Sejahtera

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

The idea behind Titan Company Limited and Damai Sejahtera Abadi 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.