Correlation Between Fast Food and Weha Transportasi
Can any of the company-specific risk be diversified away by investing in both Fast Food and Weha Transportasi 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 Fast Food and Weha Transportasi into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fast Food Indonesia and Weha Transportasi Indonesia, you can compare the effects of market volatilities on Fast Food and Weha Transportasi 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 Fast Food with a short position of Weha Transportasi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fast Food and Weha Transportasi.
Diversification Opportunities for Fast Food and Weha Transportasi
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Fast and Weha is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Fast Food Indonesia and Weha Transportasi Indonesia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Weha Transportasi and Fast Food 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 Fast Food Indonesia are associated (or correlated) with Weha Transportasi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Weha Transportasi has no effect on the direction of Fast Food i.e., Fast Food and Weha Transportasi go up and down completely randomly.
Pair Corralation between Fast Food and Weha Transportasi
Assuming the 90 days trading horizon Fast Food Indonesia is expected to under-perform the Weha Transportasi. But the stock apears to be less risky and, when comparing its historical volatility, Fast Food Indonesia is 1.11 times less risky than Weha Transportasi. The stock trades about -0.08 of its potential returns per unit of risk. The Weha Transportasi Indonesia is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 11,546 in Weha Transportasi Indonesia on August 31, 2024 and sell it today you would earn a total of 754.00 from holding Weha Transportasi Indonesia or generate 6.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.72% |
| Values | Daily Returns |
Fast Food Indonesia vs. Weha Transportasi Indonesia
Performance |
| Timeline |
| Fast Food Indonesia |
| Weha Transportasi |
Fast Food and Weha Transportasi Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fast Food and Weha Transportasi
The main advantage of trading using opposite Fast Food and Weha Transportasi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fast Food position performs unexpectedly, Weha Transportasi 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 Weha Transportasi will offset losses from the drop in Weha Transportasi's long position.| Fast Food vs. Japfa Comfeed Indonesia | Fast Food vs. Charoen Pokphand Indonesia | Fast Food vs. Erajaya Swasembada Tbk | Fast Food vs. Indofood Cbp Sukses |
| Weha Transportasi vs. Matahari Department Store | Weha Transportasi vs. Multi Medika Internasional | Weha Transportasi vs. Visi Media Asia | Weha Transportasi vs. Bayan Resources 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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