Correlation Between Weha Transportasi and Dharma Polimetal

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

By analyzing existing cross correlation between Weha Transportasi Indonesia and Dharma Polimetal Tbk, you can compare the effects of market volatilities on Weha Transportasi and Dharma Polimetal 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 Weha Transportasi with a short position of Dharma Polimetal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Weha Transportasi and Dharma Polimetal.

Diversification Opportunities for Weha Transportasi and Dharma Polimetal

0.93

Correlation Coefficient

Weha Transportasi  Dharma Polimetal

Almost no diversification

The 3 months correlation between Weha and Dharma is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Weha Transportasi Indonesia and Dharma Polimetal Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dharma Polimetal Tbk and Weha Transportasi 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 Weha Transportasi Indonesia are associated (or correlated) with Dharma Polimetal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dharma Polimetal Tbk has no effect on the direction of Weha Transportasi i.e., Weha Transportasi and Dharma Polimetal go up and down completely randomly.

Pair Corralation between Weha Transportasi and Dharma Polimetal

Assuming the 90 days trading horizon Weha Transportasi Indonesia is expected to under-perform the Dharma Polimetal. In addition to that, Weha Transportasi is 1.1 times more volatile than Dharma Polimetal Tbk. It trades about -0.26 of its total potential returns per unit of risk. Dharma Polimetal Tbk is currently generating about -0.16 per unit of volatility. If you would invest  102,500  in Dharma Polimetal Tbk on December 2, 2024 and sell it today you would lose (13,500) from holding Dharma Polimetal Tbk or give up 13.17% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

Weha Transportasi Indonesia  vs.  Dharma Polimetal Tbk

Weha Transportasi

Risk-Adjusted Performance

Very Weak

Over the last 90 days Weha Transportasi Indonesia has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's forward-looking signals remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Dharma Polimetal Tbk

Risk-Adjusted Performance

Very Weak

Over the last 90 days Dharma Polimetal Tbk has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's forward-looking signals remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Weha Transportasi and Dharma Polimetal

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

The idea behind Weha Transportasi Indonesia and Dharma Polimetal 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.

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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.