Correlation Between Damai Sejahtera and Lima Dua

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

Diversification Opportunities for Damai Sejahtera and Lima Dua

0.78

Correlation Coefficient

Damai Sejahtera  Lima Dua

Poor diversification

The 3 months correlation between Damai and Lima is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Damai Sejahtera Abadi and Lima Dua Lima in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lima Dua Lima 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 Lima Dua. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lima Dua Lima has no effect on the direction of Damai Sejahtera i.e., Damai Sejahtera and Lima Dua go up and down completely randomly.

Pair Corralation between Damai Sejahtera and Lima Dua

Assuming the 90 days trading horizon Damai Sejahtera Abadi is expected to generate 0.85 times more return on investment than Lima Dua. However, Damai Sejahtera Abadi is 1.18 times less risky than Lima Dua. It trades about 0.14 of its potential returns per unit of risk. Lima Dua Lima is currently generating about -0.01 per unit of risk. If you would invest  14,639  in Damai Sejahtera Abadi on September 13, 2024 and sell it today you would earn a total of  11,761  from holding Damai Sejahtera Abadi or generate 80.34% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	99.57%
Values	Daily Returns

Damai Sejahtera Abadi  vs.  Lima Dua Lima

Damai Sejahtera Abadi

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Damai Sejahtera Abadi are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Damai Sejahtera disclosed solid returns over the last few months and may actually be approaching a breakup point.

Lima Dua Lima

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Lima Dua Lima are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Lima Dua disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Damai Sejahtera and Lima Dua

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

The idea behind Damai Sejahtera Abadi and Lima Dua Lima 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.