Correlation Between Weha Transportasi and Akbar Indomakmur
Can any of the company-specific risk be diversified away by investing in both Weha Transportasi and Akbar Indomakmur 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 Weha Transportasi and Akbar Indomakmur into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Weha Transportasi Indonesia and Akbar Indomakmur Stimec, you can compare the effects of market volatilities on Weha Transportasi and Akbar Indomakmur 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 Weha Transportasi with a short position of Akbar Indomakmur. Check out your portfolio center. Please also check ongoing floating volatility patterns of Weha Transportasi and Akbar Indomakmur.
Diversification Opportunities for Weha Transportasi and Akbar Indomakmur
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Weha and Akbar is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Weha Transportasi Indonesia and Akbar Indomakmur Stimec in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Akbar Indomakmur Stimec and Weha Transportasi 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 Weha Transportasi Indonesia are associated (or correlated) with Akbar Indomakmur. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Akbar Indomakmur Stimec has no effect on the direction of Weha Transportasi i.e., Weha Transportasi and Akbar Indomakmur go up and down completely randomly.
Pair Corralation between Weha Transportasi and Akbar Indomakmur
Assuming the 90 days trading horizon Weha Transportasi is expected to generate 3.17 times less return on investment than Akbar Indomakmur. But when comparing it to its historical volatility, Weha Transportasi Indonesia is 2.0 times less risky than Akbar Indomakmur. It trades about 0.03 of its potential returns per unit of risk. Akbar Indomakmur Stimec is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 22,000 in Akbar Indomakmur Stimec on August 28, 2024 and sell it today you would earn a total of 22,800 from holding Akbar Indomakmur Stimec or generate 103.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.79% |
| Values | Daily Returns |
Weha Transportasi Indonesia vs. Akbar Indomakmur Stimec
Performance |
| Timeline |
| Weha Transportasi |
| Akbar Indomakmur Stimec |
Weha Transportasi and Akbar Indomakmur Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Weha Transportasi and Akbar Indomakmur
The main advantage of trading using opposite Weha Transportasi and Akbar Indomakmur positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Weha Transportasi position performs unexpectedly, Akbar Indomakmur 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 Akbar Indomakmur will offset losses from the drop in Akbar Indomakmur's long position.The idea behind Weha Transportasi Indonesia and Akbar Indomakmur Stimec 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.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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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