Correlation Between Wesfarmers and Aneka Tambang
Can any of the company-specific risk be diversified away by investing in both Wesfarmers and Aneka Tambang 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 Wesfarmers and Aneka Tambang into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wesfarmers and Aneka Tambang Tbk, you can compare the effects of market volatilities on Wesfarmers and Aneka Tambang 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 Wesfarmers with a short position of Aneka Tambang. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wesfarmers and Aneka Tambang.
Diversification Opportunities for Wesfarmers and Aneka Tambang
0.11 | Correlation Coefficient |
Average diversification
The 3 months correlation between Wesfarmers and Aneka is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Wesfarmers and Aneka Tambang Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aneka Tambang Tbk and Wesfarmers 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 Wesfarmers are associated (or correlated) with Aneka Tambang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aneka Tambang Tbk has no effect on the direction of Wesfarmers i.e., Wesfarmers and Aneka Tambang go up and down completely randomly.
Pair Corralation between Wesfarmers and Aneka Tambang
Assuming the 90 days trading horizon Wesfarmers is expected to generate 0.4 times more return on investment than Aneka Tambang. However, Wesfarmers is 2.51 times less risky than Aneka Tambang. It trades about 0.27 of its potential returns per unit of risk. Aneka Tambang Tbk is currently generating about -0.01 per unit of risk. If you would invest 6,764 in Wesfarmers on August 31, 2024 and sell it today you would earn a total of 419.00 from holding Wesfarmers or generate 6.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wesfarmers vs. Aneka Tambang Tbk
Performance |
| Timeline |
| Wesfarmers |
| Aneka Tambang Tbk |
Wesfarmers and Aneka Tambang Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wesfarmers and Aneka Tambang
The main advantage of trading using opposite Wesfarmers and Aneka Tambang positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wesfarmers position performs unexpectedly, Aneka Tambang 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 Aneka Tambang will offset losses from the drop in Aneka Tambang's long position.| Wesfarmers vs. Dug Technology | Wesfarmers vs. Aeon Metals | Wesfarmers vs. Talisman Mining | Wesfarmers vs. Metro Mining |
| Aneka Tambang vs. American West Metals | Aneka Tambang vs. Super Retail Group | Aneka Tambang vs. Computershare | Aneka Tambang vs. Alto Metals |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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