Correlation Between Aneka Gas and Wijaya Karya

Can any of the company-specific risk be diversified away by investing in both Aneka Gas and Wijaya Karya 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 Aneka Gas and Wijaya Karya into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Aneka Gas Industri and Wijaya Karya Beton, you can compare the effects of market volatilities on Aneka Gas and Wijaya Karya 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 Aneka Gas with a short position of Wijaya Karya. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aneka Gas and Wijaya Karya.

Diversification Opportunities for Aneka Gas and Wijaya Karya

0.63

Correlation Coefficient

Aneka Gas  Wijaya Karya

Poor diversification

The 3 months correlation between Aneka and Wijaya is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Aneka Gas Industri and Wijaya Karya Beton in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wijaya Karya Beton and Aneka Gas 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 Aneka Gas Industri are associated (or correlated) with Wijaya Karya. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wijaya Karya Beton has no effect on the direction of Aneka Gas i.e., Aneka Gas and Wijaya Karya go up and down completely randomly.

Pair Corralation between Aneka Gas and Wijaya Karya

Assuming the 90 days trading horizon Aneka Gas Industri is expected to under-perform the Wijaya Karya. But the stock apears to be less risky and, when comparing its historical volatility, Aneka Gas Industri is 2.14 times less risky than Wijaya Karya. The stock trades about -0.09 of its potential returns per unit of risk. The Wijaya Karya Beton is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  7,700  in Wijaya Karya Beton on December 30, 2024 and sell it today you would lose (100.00) from holding Wijaya Karya Beton or give up 1.3% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Aneka Gas Industri  vs.  Wijaya Karya Beton

Aneka Gas Industri

Risk-Adjusted Performance

Very Weak

Over the last 90 days Aneka Gas Industri has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's forward-looking signals remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Wijaya Karya Beton

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Wijaya Karya Beton are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Wijaya Karya may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Aneka Gas and Wijaya Karya

The main advantage of trading using opposite Aneka Gas and Wijaya Karya positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aneka Gas position performs unexpectedly, Wijaya Karya 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 Wijaya Karya will offset losses from the drop in Wijaya Karya's long position.

The idea behind Aneka Gas Industri and Wijaya Karya Beton 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.

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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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.