Correlation Between Indosterling Technomedia and Weha Transportasi
Can any of the company-specific risk be diversified away by investing in both Indosterling Technomedia 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 Indosterling Technomedia and Weha Transportasi into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Indosterling Technomedia Tbk and Weha Transportasi Indonesia, you can compare the effects of market volatilities on Indosterling Technomedia 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 Indosterling Technomedia with a short position of Weha Transportasi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Indosterling Technomedia and Weha Transportasi.
Diversification Opportunities for Indosterling Technomedia and Weha Transportasi
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Indosterling and Weha is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Indosterling Technomedia Tbk and Weha Transportasi Indonesia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Weha Transportasi and Indosterling Technomedia 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 Indosterling Technomedia Tbk 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 Indosterling Technomedia i.e., Indosterling Technomedia and Weha Transportasi go up and down completely randomly.
Pair Corralation between Indosterling Technomedia and Weha Transportasi
Assuming the 90 days trading horizon Indosterling Technomedia Tbk is expected to under-perform the Weha Transportasi. But the stock apears to be less risky and, when comparing its historical volatility, Indosterling Technomedia Tbk is 1.04 times less risky than Weha Transportasi. The stock trades about -0.34 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 10,600 in Weha Transportasi Indonesia on September 12, 2024 and sell it today you would earn a total of 1,600 from holding Weha Transportasi Indonesia or generate 15.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 99.79% |
| Values | Daily Returns |
Indosterling Technomedia Tbk vs. Weha Transportasi Indonesia
Performance |
| Timeline |
| Indosterling Technomedia |
| Weha Transportasi |
Indosterling Technomedia and Weha Transportasi Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Indosterling Technomedia and Weha Transportasi
The main advantage of trading using opposite Indosterling Technomedia and Weha Transportasi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Indosterling Technomedia 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.The idea behind Indosterling Technomedia Tbk and Weha Transportasi Indonesia pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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