Correlation Between Weha Transportasi and Trans Power
Can any of the company-specific risk be diversified away by investing in both Weha Transportasi and Trans Power 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 Trans Power 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 Trans Power Marine, you can compare the effects of market volatilities on Weha Transportasi and Trans Power 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 Trans Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of Weha Transportasi and Trans Power.
Diversification Opportunities for Weha Transportasi and Trans Power
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Weha and Trans is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Weha Transportasi Indonesia and Trans Power Marine in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trans Power Marine 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 Trans Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trans Power Marine has no effect on the direction of Weha Transportasi i.e., Weha Transportasi and Trans Power go up and down completely randomly.
Pair Corralation between Weha Transportasi and Trans Power
Assuming the 90 days trading horizon Weha Transportasi is expected to generate 3.08 times less return on investment than Trans Power. In addition to that, Weha Transportasi is 1.05 times more volatile than Trans Power Marine. It trades about 0.02 of its total potential returns per unit of risk. Trans Power Marine is currently generating about 0.07 per unit of volatility. If you would invest 38,473 in Trans Power Marine on August 31, 2024 and sell it today you would earn a total of 25,527 from holding Trans Power Marine or generate 66.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.72% |
| Values | Daily Returns |
Weha Transportasi Indonesia vs. Trans Power Marine
Performance |
| Timeline |
| Weha Transportasi |
| Trans Power Marine |
Weha Transportasi and Trans Power Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Weha Transportasi and Trans Power
The main advantage of trading using opposite Weha Transportasi and Trans Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Weha Transportasi position performs unexpectedly, Trans Power 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 Trans Power will offset losses from the drop in Trans Power's long position.| Weha Transportasi vs. Matahari Department Store | Weha Transportasi vs. Multi Medika Internasional | Weha Transportasi vs. Visi Media Asia | Weha Transportasi vs. Bayan Resources Tbk |
| Trans Power vs. Pelayaran Nelly Dwi | Trans Power vs. Wintermar Offshore Marine | Trans Power vs. Pelita Samudera Shipping | Trans Power vs. Samudera Indonesia Tbk |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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