Correlation Between Unilever Indonesia and Wismilak Inti
Can any of the company-specific risk be diversified away by investing in both Unilever Indonesia and Wismilak Inti 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 Unilever Indonesia and Wismilak Inti into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Unilever Indonesia Tbk and Wismilak Inti Makmur, you can compare the effects of market volatilities on Unilever Indonesia and Wismilak Inti 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 Unilever Indonesia with a short position of Wismilak Inti. Check out your portfolio center. Please also check ongoing floating volatility patterns of Unilever Indonesia and Wismilak Inti.
Diversification Opportunities for Unilever Indonesia and Wismilak Inti
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Unilever and Wismilak is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Unilever Indonesia Tbk and Wismilak Inti Makmur in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wismilak Inti Makmur and Unilever Indonesia 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 Unilever Indonesia Tbk are associated (or correlated) with Wismilak Inti. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wismilak Inti Makmur has no effect on the direction of Unilever Indonesia i.e., Unilever Indonesia and Wismilak Inti go up and down completely randomly.
Pair Corralation between Unilever Indonesia and Wismilak Inti
Assuming the 90 days trading horizon Unilever Indonesia Tbk is expected to under-perform the Wismilak Inti. But the stock apears to be less risky and, when comparing its historical volatility, Unilever Indonesia Tbk is 1.6 times less risky than Wismilak Inti. The stock trades about -0.09 of its potential returns per unit of risk. The Wismilak Inti Makmur is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 107,481 in Wismilak Inti Makmur on August 31, 2024 and sell it today you would lose (30,481) from holding Wismilak Inti Makmur or give up 28.36% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.72% |
| Values | Daily Returns |
Unilever Indonesia Tbk vs. Wismilak Inti Makmur
Performance |
| Timeline |
| Unilever Indonesia Tbk |
| Wismilak Inti Makmur |
Unilever Indonesia and Wismilak Inti Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Unilever Indonesia and Wismilak Inti
The main advantage of trading using opposite Unilever Indonesia and Wismilak Inti positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Unilever Indonesia position performs unexpectedly, Wismilak Inti 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 Wismilak Inti will offset losses from the drop in Wismilak Inti's long position.| Unilever Indonesia vs. PT Indofood Sukses | Unilever Indonesia vs. Astra International Tbk | Unilever Indonesia vs. Telkom Indonesia Tbk | Unilever Indonesia vs. Bank Central Asia |
| Wismilak Inti vs. Bekasi Fajar Industrial | Wismilak Inti vs. Erajaya Swasembada Tbk | Wismilak Inti vs. Semen Baturaja Persero | Wismilak Inti vs. Ultra Jaya Milk |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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