Correlation Between Wijaya Karya and Mitrabara Adiperdana
Can any of the company-specific risk be diversified away by investing in both Wijaya Karya and Mitrabara Adiperdana 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 Wijaya Karya and Mitrabara Adiperdana into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wijaya Karya Bangunan and Mitrabara Adiperdana PT, you can compare the effects of market volatilities on Wijaya Karya and Mitrabara Adiperdana 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 Wijaya Karya with a short position of Mitrabara Adiperdana. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wijaya Karya and Mitrabara Adiperdana.
Diversification Opportunities for Wijaya Karya and Mitrabara Adiperdana
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Wijaya and Mitrabara is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Wijaya Karya Bangunan and Mitrabara Adiperdana PT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mitrabara Adiperdana and Wijaya Karya 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 Wijaya Karya Bangunan are associated (or correlated) with Mitrabara Adiperdana. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mitrabara Adiperdana has no effect on the direction of Wijaya Karya i.e., Wijaya Karya and Mitrabara Adiperdana go up and down completely randomly.
Pair Corralation between Wijaya Karya and Mitrabara Adiperdana
Assuming the 90 days trading horizon Wijaya Karya Bangunan is expected to under-perform the Mitrabara Adiperdana. But the stock apears to be less risky and, when comparing its historical volatility, Wijaya Karya Bangunan is 1.34 times less risky than Mitrabara Adiperdana. The stock trades about -0.46 of its potential returns per unit of risk. The Mitrabara Adiperdana PT is currently generating about -0.16 of returns per unit of risk over similar time horizon. If you would invest 300,000 in Mitrabara Adiperdana PT on September 19, 2024 and sell it today you would lose (18,000) from holding Mitrabara Adiperdana PT or give up 6.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wijaya Karya Bangunan vs. Mitrabara Adiperdana PT
Performance |
| Timeline |
| Wijaya Karya Bangunan |
| Mitrabara Adiperdana |
Wijaya Karya and Mitrabara Adiperdana Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wijaya Karya and Mitrabara Adiperdana
The main advantage of trading using opposite Wijaya Karya and Mitrabara Adiperdana positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wijaya Karya position performs unexpectedly, Mitrabara Adiperdana 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 Mitrabara Adiperdana will offset losses from the drop in Mitrabara Adiperdana's long position.| Wijaya Karya vs. Wijaya Karya Beton | Wijaya Karya vs. Waskita Beton Precast | Wijaya Karya vs. Pembangunan Perumahan PT | Wijaya Karya vs. Puradelta Lestari PT |
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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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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