Correlation Between Estika Tata and PT Wahana

Can any of the company-specific risk be diversified away by investing in both Estika Tata and PT Wahana 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 Estika Tata and PT Wahana into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Estika Tata Tiara and PT Wahana Interfood, you can compare the effects of market volatilities on Estika Tata and PT Wahana 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 Estika Tata with a short position of PT Wahana. Check out your portfolio center. Please also check ongoing floating volatility patterns of Estika Tata and PT Wahana.

Diversification Opportunities for Estika Tata and PT Wahana

0.7

Correlation Coefficient

Estika Tata  PT Wahana

Poor diversification

The 3 months correlation between Estika and COCO is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Estika Tata Tiara and PT Wahana Interfood in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PT Wahana Interfood and Estika Tata 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 Estika Tata Tiara are associated (or correlated) with PT Wahana. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PT Wahana Interfood has no effect on the direction of Estika Tata i.e., Estika Tata and PT Wahana go up and down completely randomly.

Pair Corralation between Estika Tata and PT Wahana

Assuming the 90 days trading horizon Estika Tata Tiara is expected to under-perform the PT Wahana. In addition to that, Estika Tata is 3.83 times more volatile than PT Wahana Interfood. It trades about -0.05 of its total potential returns per unit of risk. PT Wahana Interfood is currently generating about -0.12 per unit of volatility. If you would invest  9,700  in PT Wahana Interfood on September 3, 2024 and sell it today you would lose (1,100) from holding PT Wahana Interfood or give up 11.34% of portfolio value over 90 days.

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

Estika Tata Tiara  vs.  PT Wahana Interfood

Estika Tata Tiara

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Estika Tata Tiara 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 January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

PT Wahana Interfood

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PT Wahana Interfood 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.

Pair Trading with Estika Tata and PT Wahana

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

The idea behind Estika Tata Tiara and PT Wahana Interfood 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.