Correlation Between Adaro Energy and Wijaya Karya
Can any of the company-specific risk be diversified away by investing in both Adaro Energy and Wijaya Karya 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 Adaro Energy and Wijaya Karya into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Adaro Energy Tbk and Wijaya Karya Beton, you can compare the effects of market volatilities on Adaro Energy and Wijaya Karya 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 Adaro Energy with a short position of Wijaya Karya. Check out your portfolio center. Please also check ongoing floating volatility patterns of Adaro Energy and Wijaya Karya.
Diversification Opportunities for Adaro Energy and Wijaya Karya
-0.79 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Adaro and Wijaya is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding Adaro Energy Tbk and Wijaya Karya Beton in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wijaya Karya Beton and Adaro Energy 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 Adaro Energy Tbk are associated (or correlated) with Wijaya Karya. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wijaya Karya Beton has no effect on the direction of Adaro Energy i.e., Adaro Energy and Wijaya Karya go up and down completely randomly.
Pair Corralation between Adaro Energy and Wijaya Karya
Assuming the 90 days trading horizon Adaro Energy Tbk is expected to generate 2.88 times more return on investment than Wijaya Karya. However, Adaro Energy is 2.88 times more volatile than Wijaya Karya Beton. It trades about 0.07 of its potential returns per unit of risk. Wijaya Karya Beton is currently generating about -0.21 per unit of risk. If you would invest 175,155 in Adaro Energy Tbk on November 2, 2024 and sell it today you would earn a total of 54,845 from holding Adaro Energy Tbk or generate 31.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.0% |
| Values | Daily Returns |
Adaro Energy Tbk vs. Wijaya Karya Beton
Performance |
| Timeline |
| Adaro Energy Tbk |
| Wijaya Karya Beton |
Adaro Energy and Wijaya Karya Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Adaro Energy and Wijaya Karya
The main advantage of trading using opposite Adaro Energy and Wijaya Karya positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Adaro Energy position performs unexpectedly, Wijaya Karya 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 Wijaya Karya will offset losses from the drop in Wijaya Karya's long position.| Adaro Energy vs. Bukit Asam Tbk | Adaro Energy vs. Aneka Tambang Persero | Adaro Energy vs. Perusahaan Gas Negara | Adaro Energy vs. Indo Tambangraya Megah |
| Wijaya Karya vs. Waskita Karya Persero | Wijaya Karya vs. Waskita Beton Precast | Wijaya Karya vs. Pembangunan Perumahan PT | Wijaya Karya vs. Wijaya Karya Beton |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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