Correlation Between Damai Sejahtera and Andalan Sakti

Can any of the company-specific risk be diversified away by investing in both Damai Sejahtera and Andalan Sakti 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 Damai Sejahtera and Andalan Sakti into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Damai Sejahtera Abadi and Andalan Sakti Primaindo, you can compare the effects of market volatilities on Damai Sejahtera and Andalan Sakti 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 Damai Sejahtera with a short position of Andalan Sakti. Check out your portfolio center. Please also check ongoing floating volatility patterns of Damai Sejahtera and Andalan Sakti.

Diversification Opportunities for Damai Sejahtera and Andalan Sakti

-0.29

Correlation Coefficient

Damai Sejahtera  Andalan Sakti

Very good diversification

The 3 months correlation between Damai and Andalan is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Damai Sejahtera Abadi and Andalan Sakti Primaindo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Andalan Sakti Primaindo and Damai Sejahtera 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 Damai Sejahtera Abadi are associated (or correlated) with Andalan Sakti. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Andalan Sakti Primaindo has no effect on the direction of Damai Sejahtera i.e., Damai Sejahtera and Andalan Sakti go up and down completely randomly.

Pair Corralation between Damai Sejahtera and Andalan Sakti

Assuming the 90 days trading horizon Damai Sejahtera Abadi is expected to under-perform the Andalan Sakti. But the stock apears to be less risky and, when comparing its historical volatility, Damai Sejahtera Abadi is 1.91 times less risky than Andalan Sakti. The stock trades about -0.03 of its potential returns per unit of risk. The Andalan Sakti Primaindo is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  13,200  in Andalan Sakti Primaindo on December 30, 2024 and sell it today you would earn a total of  4,600  from holding Andalan Sakti Primaindo or generate 34.85% return on investment over 90 days.

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

Damai Sejahtera Abadi  vs.  Andalan Sakti Primaindo

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.

Andalan Sakti Primaindo

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Andalan Sakti Primaindo are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Andalan Sakti disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Damai Sejahtera and Andalan Sakti

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

The idea behind Damai Sejahtera Abadi and Andalan Sakti Primaindo 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.

Check out your portfolio center.

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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.