Correlation Between City Retail and Waskita Beton
Can any of the company-specific risk be diversified away by investing in both City Retail and Waskita Beton 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 City Retail and Waskita Beton into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between City Retail Developments and Waskita Beton Precast, you can compare the effects of market volatilities on City Retail and Waskita Beton 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 City Retail with a short position of Waskita Beton. Check out your portfolio center. Please also check ongoing floating volatility patterns of City Retail and Waskita Beton.
Diversification Opportunities for City Retail and Waskita Beton
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between City and Waskita is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding City Retail Developments and Waskita Beton Precast in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Waskita Beton Precast and City Retail 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 City Retail Developments are associated (or correlated) with Waskita Beton. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Waskita Beton Precast has no effect on the direction of City Retail i.e., City Retail and Waskita Beton go up and down completely randomly.
Pair Corralation between City Retail and Waskita Beton
Assuming the 90 days trading horizon City Retail Developments is expected to under-perform the Waskita Beton. But the stock apears to be less risky and, when comparing its historical volatility, City Retail Developments is 7.01 times less risky than Waskita Beton. The stock trades about -0.33 of its potential returns per unit of risk. The Waskita Beton Precast is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 1,500 in Waskita Beton Precast on October 23, 2024 and sell it today you would earn a total of 100.00 from holding Waskita Beton Precast or generate 6.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
City Retail Developments vs. Waskita Beton Precast
Performance |
| Timeline |
| City Retail Developments |
| Waskita Beton Precast |
City Retail and Waskita Beton Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with City Retail and Waskita Beton
The main advantage of trading using opposite City Retail and Waskita Beton positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if City Retail position performs unexpectedly, Waskita Beton 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 Waskita Beton will offset losses from the drop in Waskita Beton's long position.| City Retail vs. Metropolitan Land Tbk | City Retail vs. Bekasi Fajar Industrial | City Retail vs. Greenwood Sejahtera Tbk | City Retail vs. Metropolitan Kentjana Tbk |
| Waskita Beton vs. City Retail Developments | Waskita Beton vs. Weha Transportasi Indonesia | Waskita Beton vs. HK Metals Utama | Waskita Beton vs. Hoffmen Cleanindo |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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