Correlation Between Merdeka Copper and Weha Transportasi
Can any of the company-specific risk be diversified away by investing in both Merdeka Copper 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 Merdeka Copper and Weha Transportasi into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Merdeka Copper Gold and Weha Transportasi Indonesia, you can compare the effects of market volatilities on Merdeka Copper 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 Merdeka Copper with a short position of Weha Transportasi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merdeka Copper and Weha Transportasi.
Diversification Opportunities for Merdeka Copper and Weha Transportasi
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Merdeka and Weha is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Merdeka Copper Gold and Weha Transportasi Indonesia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Weha Transportasi and Merdeka Copper 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 Merdeka Copper Gold 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 Merdeka Copper i.e., Merdeka Copper and Weha Transportasi go up and down completely randomly.
Pair Corralation between Merdeka Copper and Weha Transportasi
Assuming the 90 days trading horizon Merdeka Copper Gold is expected to under-perform the Weha Transportasi. In addition to that, Merdeka Copper is 1.04 times more volatile than Weha Transportasi Indonesia. It trades about -0.17 of its total potential returns per unit of risk. Weha Transportasi Indonesia is currently generating about -0.02 per unit of volatility. If you would invest 12,800 in Weha Transportasi Indonesia on September 3, 2024 and sell it today you would lose (500.00) from holding Weha Transportasi Indonesia or give up 3.91% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Merdeka Copper Gold vs. Weha Transportasi Indonesia
Performance |
| Timeline |
| Merdeka Copper Gold |
| Weha Transportasi |
Merdeka Copper and Weha Transportasi Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merdeka Copper and Weha Transportasi
The main advantage of trading using opposite Merdeka Copper and Weha Transportasi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merdeka Copper 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.| Merdeka Copper vs. Timah Persero Tbk | Merdeka Copper vs. Semen Indonesia Persero | Merdeka Copper vs. Mitra Pinasthika Mustika | Merdeka Copper vs. Jakarta Int Hotels |
| Weha Transportasi vs. Intanwijaya Internasional Tbk | Weha Transportasi vs. Champion Pacific Indonesia | Weha Transportasi vs. Mitra Pinasthika Mustika | Weha Transportasi vs. Jakarta Int Hotels |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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