Correlation Between Delta Djakarta and Wilmar Cahaya
Can any of the company-specific risk be diversified away by investing in both Delta Djakarta and Wilmar Cahaya 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 Delta Djakarta and Wilmar Cahaya into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Delta Djakarta Tbk and Wilmar Cahaya Indonesia, you can compare the effects of market volatilities on Delta Djakarta and Wilmar Cahaya 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 Delta Djakarta with a short position of Wilmar Cahaya. Check out your portfolio center. Please also check ongoing floating volatility patterns of Delta Djakarta and Wilmar Cahaya.
Diversification Opportunities for Delta Djakarta and Wilmar Cahaya
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Delta and Wilmar is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Delta Djakarta Tbk and Wilmar Cahaya Indonesia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wilmar Cahaya Indonesia and Delta Djakarta 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 Delta Djakarta Tbk are associated (or correlated) with Wilmar Cahaya. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wilmar Cahaya Indonesia has no effect on the direction of Delta Djakarta i.e., Delta Djakarta and Wilmar Cahaya go up and down completely randomly.
Pair Corralation between Delta Djakarta and Wilmar Cahaya
Assuming the 90 days trading horizon Delta Djakarta Tbk is expected to under-perform the Wilmar Cahaya. But the stock apears to be less risky and, when comparing its historical volatility, Delta Djakarta Tbk is 1.19 times less risky than Wilmar Cahaya. The stock trades about -0.13 of its potential returns per unit of risk. The Wilmar Cahaya Indonesia is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 177,132 in Wilmar Cahaya Indonesia on August 26, 2024 and sell it today you would earn a total of 26,868 from holding Wilmar Cahaya Indonesia or generate 15.17% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Delta Djakarta Tbk vs. Wilmar Cahaya Indonesia
Performance |
Timeline |
Delta Djakarta Tbk |
Wilmar Cahaya Indonesia |
Delta Djakarta and Wilmar Cahaya Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Delta Djakarta and Wilmar Cahaya
The main advantage of trading using opposite Delta Djakarta and Wilmar Cahaya positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Delta Djakarta position performs unexpectedly, Wilmar Cahaya 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 Wilmar Cahaya will offset losses from the drop in Wilmar Cahaya's long position.Delta Djakarta vs. Charoen Pokphand Indonesia | Delta Djakarta vs. Kalbe Farma Tbk | Delta Djakarta vs. Indofood Cbp Sukses | Delta Djakarta vs. Akr Corporindo Tbk |
Wilmar Cahaya vs. Charoen Pokphand Indonesia | Wilmar Cahaya vs. Kalbe Farma Tbk | Wilmar Cahaya vs. Indofood Cbp Sukses | Wilmar Cahaya vs. Akr Corporindo Tbk |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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