Correlation Between Buana Listya and Wijaya Karya
Can any of the company-specific risk be diversified away by investing in both Buana Listya 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 Buana Listya and Wijaya Karya into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Buana Listya Tama and Wijaya Karya Beton, you can compare the effects of market volatilities on Buana Listya 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 Buana Listya with a short position of Wijaya Karya. Check out your portfolio center. Please also check ongoing floating volatility patterns of Buana Listya and Wijaya Karya.
Diversification Opportunities for Buana Listya and Wijaya Karya
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Buana and Wijaya is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Buana Listya Tama 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 Buana Listya 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 Buana Listya Tama 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 Buana Listya i.e., Buana Listya and Wijaya Karya go up and down completely randomly.
Pair Corralation between Buana Listya and Wijaya Karya
Assuming the 90 days trading horizon Buana Listya Tama is expected to generate 1.23 times more return on investment than Wijaya Karya. However, Buana Listya is 1.23 times more volatile than Wijaya Karya Beton. It trades about -0.15 of its potential returns per unit of risk. Wijaya Karya Beton is currently generating about -0.19 per unit of risk. If you would invest 13,600 in Buana Listya Tama on August 29, 2024 and sell it today you would lose (2,500) from holding Buana Listya Tama or give up 18.38% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Buana Listya Tama vs. Wijaya Karya Beton
Performance |
| Timeline |
| Buana Listya Tama |
| Wijaya Karya Beton |
Buana Listya and Wijaya Karya Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Buana Listya and Wijaya Karya
The main advantage of trading using opposite Buana Listya and Wijaya Karya positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Buana Listya 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.| Buana Listya vs. City Retail Developments | Buana Listya vs. PT Homeco Victoria | Buana Listya vs. Weha Transportasi Indonesia | Buana Listya vs. First Media Tbk |
| Wijaya Karya vs. Pelayaran Nelly Dwi | Wijaya Karya vs. Buana Listya Tama | Wijaya Karya vs. Mitrabahtera Segara Sejati | Wijaya Karya vs. Trans Power Marine |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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