Correlation Between PT Wahana and Optima Prima

Can any of the company-specific risk be diversified away by investing in both PT Wahana and Optima Prima 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 Optima Prima 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 Optima Prima Metal, you can compare the effects of market volatilities on PT Wahana and Optima Prima 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 Optima Prima. Check out your portfolio center. Please also check ongoing floating volatility patterns of PT Wahana and Optima Prima.

Diversification Opportunities for PT Wahana and Optima Prima

0.06

Correlation Coefficient

PT Wahana  Optima Prima

Significant diversification

The 3 months correlation between COCO and Optima is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding PT Wahana Interfood and Optima Prima Metal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Optima Prima Metal 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 Optima Prima. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Optima Prima Metal has no effect on the direction of PT Wahana i.e., PT Wahana and Optima Prima go up and down completely randomly.

Pair Corralation between PT Wahana and Optima Prima

Assuming the 90 days trading horizon PT Wahana Interfood is expected to under-perform the Optima Prima. In addition to that, PT Wahana is 6.19 times more volatile than Optima Prima Metal. It trades about -0.01 of its total potential returns per unit of risk. Optima Prima Metal is currently generating about 0.0 per unit of volatility. If you would invest  5,000  in Optima Prima Metal on December 20, 2024 and sell it today you would earn a total of  0.00  from holding Optima Prima Metal or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.28%
Values	Daily Returns

PT Wahana Interfood  vs.  Optima Prima Metal

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.

Optima Prima Metal

Risk-Adjusted Performance

Very Weak

Over the last 90 days Optima Prima Metal has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Optima Prima 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 Optima Prima

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

The idea behind PT Wahana Interfood and Optima Prima Metal 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.