Correlation Between Steel Pipe and Wijaya Karya
Can any of the company-specific risk be diversified away by investing in both Steel Pipe 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 Steel Pipe and Wijaya Karya into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Steel Pipe Industry and Wijaya Karya Beton, you can compare the effects of market volatilities on Steel Pipe 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 Steel Pipe with a short position of Wijaya Karya. Check out your portfolio center. Please also check ongoing floating volatility patterns of Steel Pipe and Wijaya Karya.
Diversification Opportunities for Steel Pipe and Wijaya Karya
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Steel and Wijaya is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Steel Pipe Industry 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 Steel Pipe 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 Steel Pipe Industry 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 Steel Pipe i.e., Steel Pipe and Wijaya Karya go up and down completely randomly.
Pair Corralation between Steel Pipe and Wijaya Karya
Assuming the 90 days trading horizon Steel Pipe is expected to generate 72.91 times less return on investment than Wijaya Karya. But when comparing it to its historical volatility, Steel Pipe Industry is 3.18 times less risky than Wijaya Karya. It trades about 0.0 of its potential returns per unit of risk. Wijaya Karya Beton is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 7,400 in Wijaya Karya Beton on October 20, 2024 and sell it today you would earn a total of 400.00 from holding Wijaya Karya Beton or generate 5.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Steel Pipe Industry vs. Wijaya Karya Beton
Performance |
| Timeline |
| Steel Pipe Industry |
| Wijaya Karya Beton |
Steel Pipe and Wijaya Karya Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Steel Pipe and Wijaya Karya
The main advantage of trading using opposite Steel Pipe and Wijaya Karya positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Steel Pipe 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.| Steel Pipe vs. Semen Baturaja Persero | Steel Pipe vs. Bekasi Fajar Industrial | Steel Pipe vs. Krakatau Steel Persero | Steel Pipe vs. Saranacentral Bajatama Tbk |
| Wijaya Karya vs. Trias Sentosa Tbk | Wijaya Karya vs. Slj Global Tbk | Wijaya Karya vs. Indo Acidatama Tbk | Wijaya Karya vs. PT Mulia Industrindo |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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