Correlation Between Alakasa Industrindo and Wijaya Karya

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Can any of the company-specific risk be diversified away by investing in both Alakasa Industrindo 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 Alakasa Industrindo and Wijaya Karya into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alakasa Industrindo Tbk and Wijaya Karya Beton, you can compare the effects of market volatilities on Alakasa Industrindo 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 Alakasa Industrindo with a short position of Wijaya Karya. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alakasa Industrindo and Wijaya Karya.

Diversification Opportunities for Alakasa Industrindo and Wijaya Karya

AlakasaWijayaDiversified AwayAlakasaWijayaDiversified Away100%
0.84
  Correlation Coefficient

Very poor diversification

The 3 months correlation between Alakasa and Wijaya is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Alakasa Industrindo Tbk 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 Alakasa Industrindo 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 Alakasa Industrindo Tbk 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 Alakasa Industrindo i.e., Alakasa Industrindo and Wijaya Karya go up and down completely randomly.

Pair Corralation between Alakasa Industrindo and Wijaya Karya

Assuming the 90 days trading horizon Alakasa Industrindo Tbk is expected to generate 1.05 times more return on investment than Wijaya Karya. However, Alakasa Industrindo is 1.05 times more volatile than Wijaya Karya Beton. It trades about -0.07 of its potential returns per unit of risk. Wijaya Karya Beton is currently generating about -0.18 per unit of risk. If you would invest  38,600  in Alakasa Industrindo Tbk on November 5, 2024 and sell it today you would lose (4,400) from holding Alakasa Industrindo Tbk or give up 11.4% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

Alakasa Industrindo Tbk  vs.  Wijaya Karya Beton

 Performance 
JavaScript chart by amCharts 3.21.15NovDec2025 -25-20-15-10-5
JavaScript chart by amCharts 3.21.15ALKA WTON
       Timeline  
Alakasa Industrindo Tbk 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Alakasa Industrindo Tbk has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's forward-looking signals remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.
JavaScript chart by amCharts 3.21.15NovDecJanDecJanFeb320340360380400420
Wijaya Karya Beton 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Wijaya Karya Beton 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 March 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.
JavaScript chart by amCharts 3.21.15NovDecJanDecJanFeb7580859095100105

Alakasa Industrindo and Wijaya Karya Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-3.9-2.92-1.94-0.960.00.891.792.73.6 0.0500.0550.0600.0650.0700.075
JavaScript chart by amCharts 3.21.15ALKA WTON
       Returns  

Pair Trading with Alakasa Industrindo and Wijaya Karya

The main advantage of trading using opposite Alakasa Industrindo and Wijaya Karya positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alakasa Industrindo 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 Alakasa Industrindo Tbk 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.

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