Correlation Between Puradelta Lestari and Wijaya Karya
Can any of the company-specific risk be diversified away by investing in both Puradelta Lestari 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 Puradelta Lestari and Wijaya Karya into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Puradelta Lestari PT and Wijaya Karya Bangunan, you can compare the effects of market volatilities on Puradelta Lestari 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 Puradelta Lestari with a short position of Wijaya Karya. Check out your portfolio center. Please also check ongoing floating volatility patterns of Puradelta Lestari and Wijaya Karya.
Diversification Opportunities for Puradelta Lestari and Wijaya Karya
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Puradelta and Wijaya is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Puradelta Lestari PT and Wijaya Karya Bangunan in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wijaya Karya Bangunan and Puradelta Lestari 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 Puradelta Lestari PT 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 Bangunan has no effect on the direction of Puradelta Lestari i.e., Puradelta Lestari and Wijaya Karya go up and down completely randomly.
Pair Corralation between Puradelta Lestari and Wijaya Karya
Assuming the 90 days trading horizon Puradelta Lestari PT is expected to under-perform the Wijaya Karya. But the stock apears to be less risky and, when comparing its historical volatility, Puradelta Lestari PT is 3.17 times less risky than Wijaya Karya. The stock trades about -0.01 of its potential returns per unit of risk. The Wijaya Karya Bangunan is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 7,883 in Wijaya Karya Bangunan on August 25, 2024 and sell it today you would lose (383.00) from holding Wijaya Karya Bangunan or give up 4.86% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Puradelta Lestari PT vs. Wijaya Karya Bangunan
Performance |
| Timeline |
| Puradelta Lestari |
| Wijaya Karya Bangunan |
Puradelta Lestari and Wijaya Karya Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Puradelta Lestari and Wijaya Karya
The main advantage of trading using opposite Puradelta Lestari and Wijaya Karya positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Puradelta Lestari 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.| Puradelta Lestari vs. Pakuwon Jati Tbk | Puradelta Lestari vs. Sido Muncul PT | Puradelta Lestari vs. Bekasi Fajar Industrial | Puradelta Lestari vs. Bank Pembangunan Timur |
| Wijaya Karya vs. Rukun Raharja Tbk | Wijaya Karya vs. PT Temas Tbk | Wijaya Karya vs. Weha Transportasi Indonesia |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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