Correlation Between Wilmar Cahaya and Tempo Scan
Can any of the company-specific risk be diversified away by investing in both Wilmar Cahaya and Tempo Scan 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 Wilmar Cahaya and Tempo Scan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wilmar Cahaya Indonesia and Tempo Scan Pacific, you can compare the effects of market volatilities on Wilmar Cahaya and Tempo Scan 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 Wilmar Cahaya with a short position of Tempo Scan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wilmar Cahaya and Tempo Scan.
Diversification Opportunities for Wilmar Cahaya and Tempo Scan
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Wilmar and Tempo is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Wilmar Cahaya Indonesia and Tempo Scan Pacific in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tempo Scan Pacific and Wilmar Cahaya 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 Wilmar Cahaya Indonesia are associated (or correlated) with Tempo Scan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tempo Scan Pacific has no effect on the direction of Wilmar Cahaya i.e., Wilmar Cahaya and Tempo Scan go up and down completely randomly.
Pair Corralation between Wilmar Cahaya and Tempo Scan
Assuming the 90 days trading horizon Wilmar Cahaya is expected to generate 5.48 times less return on investment than Tempo Scan. But when comparing it to its historical volatility, Wilmar Cahaya Indonesia is 1.6 times less risky than Tempo Scan. It trades about 0.03 of its potential returns per unit of risk. Tempo Scan Pacific is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 118,255 in Tempo Scan Pacific on August 29, 2024 and sell it today you would earn a total of 135,745 from holding Tempo Scan Pacific or generate 114.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wilmar Cahaya Indonesia vs. Tempo Scan Pacific
Performance |
| Timeline |
| Wilmar Cahaya Indonesia |
| Tempo Scan Pacific |
Wilmar Cahaya and Tempo Scan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wilmar Cahaya and Tempo Scan
The main advantage of trading using opposite Wilmar Cahaya and Tempo Scan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wilmar Cahaya position performs unexpectedly, Tempo Scan 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 Tempo Scan will offset losses from the drop in Tempo Scan's long position.| Wilmar Cahaya vs. Delta Djakarta Tbk | Wilmar Cahaya vs. Akasha Wira International | Wilmar Cahaya vs. Darya Varia Laboratoria Tbk | Wilmar Cahaya vs. Budi Starch Sweetener |
| Tempo Scan vs. Merdeka Copper Gold | Tempo Scan vs. Tower Bersama Infrastructure | Tempo Scan vs. Erajaya Swasembada Tbk | Tempo Scan vs. Surya Citra Media |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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