Correlation Between Ciptadana Asset and Dharma Polimetal

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

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

Diversification Opportunities for Ciptadana Asset and Dharma Polimetal

0.02

Correlation Coefficient

Ciptadana Asset  Dharma Polimetal

Significant diversification

The 3 months correlation between Ciptadana and Dharma is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Ciptadana Asset Management 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 Ciptadana Asset 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 Ciptadana Asset Management 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 Ciptadana Asset i.e., Ciptadana Asset and Dharma Polimetal go up and down completely randomly.

Pair Corralation between Ciptadana Asset and Dharma Polimetal

Assuming the 90 days trading horizon Ciptadana Asset Management is expected to generate 1.76 times more return on investment than Dharma Polimetal. However, Ciptadana Asset is 1.76 times more volatile than Dharma Polimetal Tbk. It trades about 0.05 of its potential returns per unit of risk. Dharma Polimetal Tbk is currently generating about -0.11 per unit of risk. If you would invest  5,700  in Ciptadana Asset Management on November 29, 2024 and sell it today you would earn a total of  300.00  from holding Ciptadana Asset Management or generate 5.26% return on investment over 90 days.

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

Ciptadana Asset Management  vs.  Dharma Polimetal Tbk

Ciptadana Asset Mana

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Ciptadana Asset Management are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Ciptadana Asset may actually be approaching a critical reversion point that can send shares even higher in March 2025.

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 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 Ciptadana Asset and Dharma Polimetal

The main advantage of trading using opposite Ciptadana Asset and Dharma Polimetal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ciptadana Asset 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 Ciptadana Asset Management 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.

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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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.