Correlation Between Sumber Energi and Wahana Pronatural
Can any of the company-specific risk be diversified away by investing in both Sumber Energi and Wahana Pronatural 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 Sumber Energi and Wahana Pronatural into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sumber Energi Andalan and Wahana Pronatural, you can compare the effects of market volatilities on Sumber Energi and Wahana Pronatural 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 Sumber Energi with a short position of Wahana Pronatural. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sumber Energi and Wahana Pronatural.
Diversification Opportunities for Sumber Energi and Wahana Pronatural
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Sumber and Wahana is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Sumber Energi Andalan and Wahana Pronatural in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wahana Pronatural and Sumber Energi 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 Sumber Energi Andalan are associated (or correlated) with Wahana Pronatural. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wahana Pronatural has no effect on the direction of Sumber Energi i.e., Sumber Energi and Wahana Pronatural go up and down completely randomly.
Pair Corralation between Sumber Energi and Wahana Pronatural
Assuming the 90 days trading horizon Sumber Energi Andalan is expected to generate 0.34 times more return on investment than Wahana Pronatural. However, Sumber Energi Andalan is 2.9 times less risky than Wahana Pronatural. It trades about -0.03 of its potential returns per unit of risk. Wahana Pronatural is currently generating about -0.01 per unit of risk. If you would invest 90,500 in Sumber Energi Andalan on December 4, 2024 and sell it today you would lose (3,000) from holding Sumber Energi Andalan or give up 3.31% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sumber Energi Andalan vs. Wahana Pronatural
Performance |
| Timeline |
| Sumber Energi Andalan |
| Wahana Pronatural |
Sumber Energi and Wahana Pronatural Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sumber Energi and Wahana Pronatural
The main advantage of trading using opposite Sumber Energi and Wahana Pronatural positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sumber Energi position performs unexpectedly, Wahana Pronatural 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 Wahana Pronatural will offset losses from the drop in Wahana Pronatural's long position.| Sumber Energi vs. Intanwijaya Internasional Tbk | ||
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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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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