Correlation Between Wijaya Karya and Kimia Farma
Can any of the company-specific risk be diversified away by investing in both Wijaya Karya and Kimia Farma 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 Kimia Farma into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wijaya Karya Beton and Kimia Farma Persero, you can compare the effects of market volatilities on Wijaya Karya and Kimia Farma 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 Kimia Farma. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wijaya Karya and Kimia Farma.
Diversification Opportunities for Wijaya Karya and Kimia Farma
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Wijaya and Kimia is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Wijaya Karya Beton and Kimia Farma Persero in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kimia Farma Persero 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 Beton are associated (or correlated) with Kimia Farma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kimia Farma Persero has no effect on the direction of Wijaya Karya i.e., Wijaya Karya and Kimia Farma go up and down completely randomly.
Pair Corralation between Wijaya Karya and Kimia Farma
Assuming the 90 days trading horizon Wijaya Karya Beton is expected to generate 1.44 times more return on investment than Kimia Farma. However, Wijaya Karya is 1.44 times more volatile than Kimia Farma Persero. It trades about 0.04 of its potential returns per unit of risk. Kimia Farma Persero is currently generating about 0.03 per unit of risk. If you would invest 19,700 in Wijaya Karya Beton on November 3, 2024 and sell it today you would earn a total of 2,500 from holding Wijaya Karya Beton or generate 12.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wijaya Karya Beton vs. Kimia Farma Persero
Performance |
| Timeline |
| Wijaya Karya Beton |
| Kimia Farma Persero |
Wijaya Karya and Kimia Farma Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wijaya Karya and Kimia Farma
The main advantage of trading using opposite Wijaya Karya and Kimia Farma positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wijaya Karya position performs unexpectedly, Kimia Farma 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 Kimia Farma will offset losses from the drop in Kimia Farma's long position.| Wijaya Karya vs. Adhi Karya Persero | Wijaya Karya vs. Waskita Karya Persero | Wijaya Karya vs. Pembangunan Perumahan PT | Wijaya Karya vs. Jasa Marga Tbk |
| Kimia Farma vs. Indofarma Tbk | Kimia Farma vs. Kalbe Farma Tbk | Kimia Farma vs. Wijaya Karya Beton | Kimia Farma vs. Adhi Karya Persero |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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