Correlation Between PT Wahana and Estika Tata

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

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

Diversification Opportunities for PT Wahana and Estika Tata

-0.19

Correlation Coefficient

PT Wahana  Estika Tata

Good diversification

The 3 months correlation between COCO and Estika is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding PT Wahana Interfood and Estika Tata Tiara in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Estika Tata Tiara and PT Wahana 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 PT Wahana Interfood are associated (or correlated) with Estika Tata. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Estika Tata Tiara has no effect on the direction of PT Wahana i.e., PT Wahana and Estika Tata go up and down completely randomly.

Pair Corralation between PT Wahana and Estika Tata

Assuming the 90 days trading horizon PT Wahana Interfood is expected to under-perform the Estika Tata. In addition to that, PT Wahana is 1.4 times more volatile than Estika Tata Tiara. It trades about -0.01 of its total potential returns per unit of risk. Estika Tata Tiara is currently generating about 0.01 per unit of volatility. If you would invest  11,900  in Estika Tata Tiara on December 1, 2024 and sell it today you would lose (300.00) from holding Estika Tata Tiara or give up 2.52% of portfolio value over 90 days.

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

PT Wahana Interfood  vs.  Estika Tata Tiara

PT Wahana Interfood

Risk-Adjusted Performance

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 quite persistent forward-looking signals, PT Wahana is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Estika Tata Tiara

Risk-Adjusted Performance

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 quite persistent forward-looking signals, Estika Tata is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with PT Wahana and Estika Tata

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

The idea behind PT Wahana Interfood and Estika Tata Tiara 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.