Correlation Between Sentul City and Wahana Pronatural

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

Diversification Opportunities for Sentul City and Wahana Pronatural

SentulWahanaDiversified AwaySentulWahanaDiversified Away100%
0.33
  Correlation Coefficient

Weak diversification

The 3 months correlation between Sentul and Wahana is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Sentul City Tbk and Wahana Pronatural in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wahana Pronatural and Sentul City 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 Sentul City Tbk are associated (or correlated) with Wahana Pronatural. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wahana Pronatural has no effect on the direction of Sentul City i.e., Sentul City and Wahana Pronatural go up and down completely randomly.

Pair Corralation between Sentul City and Wahana Pronatural

Assuming the 90 days trading horizon Sentul City Tbk is expected to generate 0.83 times more return on investment than Wahana Pronatural. However, Sentul City Tbk is 1.2 times less risky than Wahana Pronatural. It trades about 0.23 of its potential returns per unit of risk. Wahana Pronatural is currently generating about 0.12 per unit of risk. If you would invest  3,800  in Sentul City Tbk on November 24, 2024 and sell it today you would earn a total of  3,500  from holding Sentul City Tbk or generate 92.11% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Sentul City Tbk  vs.  Wahana Pronatural

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb 0204060
JavaScript chart by amCharts 3.21.15BKSL WAPO
       Timeline  
Sentul City Tbk 

Risk-Adjusted Performance

Solid

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Sentul City Tbk are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Sentul City disclosed solid returns over the last few months and may actually be approaching a breakup point.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb4045505560657075
Wahana Pronatural 

Risk-Adjusted Performance

OK

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Wahana Pronatural are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Wahana Pronatural disclosed solid returns over the last few months and may actually be approaching a breakup point.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb100120140160180

Sentul City and Wahana Pronatural Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-16.27-12.19-8.1-4.020.04.258.7313.2117.6822.16 0.0090.0100.0110.0120.013
JavaScript chart by amCharts 3.21.15BKSL WAPO
       Returns  

Pair Trading with Sentul City and Wahana Pronatural

The main advantage of trading using opposite Sentul City and Wahana Pronatural positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sentul City position performs unexpectedly, Wahana Pronatural 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 Wahana Pronatural will offset losses from the drop in Wahana Pronatural's long position.
The idea behind Sentul City Tbk and Wahana Pronatural 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.

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