Correlation Between Garda Tujuh and Wijaya Karya

Can any of the company-specific risk be diversified away by investing in both Garda Tujuh 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 Garda Tujuh and Wijaya Karya into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Garda Tujuh Buana and Wijaya Karya Bangunan, you can compare the effects of market volatilities on Garda Tujuh 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 Garda Tujuh with a short position of Wijaya Karya. Check out your portfolio center. Please also check ongoing floating volatility patterns of Garda Tujuh and Wijaya Karya.

Diversification Opportunities for Garda Tujuh and Wijaya Karya

0.81

Correlation Coefficient

Garda Tujuh  Wijaya Karya

Very poor diversification

The 3 months correlation between Garda and Wijaya is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Garda Tujuh Buana and Wijaya Karya Bangunan in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wijaya Karya Bangunan and Garda Tujuh 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 Garda Tujuh Buana 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 Bangunan has no effect on the direction of Garda Tujuh i.e., Garda Tujuh and Wijaya Karya go up and down completely randomly.

Pair Corralation between Garda Tujuh and Wijaya Karya

Assuming the 90 days trading horizon Garda Tujuh Buana is expected to under-perform the Wijaya Karya. But the stock apears to be less risky and, when comparing its historical volatility, Garda Tujuh Buana is 1.6 times less risky than Wijaya Karya. The stock trades about -0.28 of its potential returns per unit of risk. The Wijaya Karya Bangunan is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  6,400  in Wijaya Karya Bangunan on December 30, 2024 and sell it today you would lose (800.00) from holding Wijaya Karya Bangunan or give up 12.5% of portfolio value over 90 days.

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

Garda Tujuh Buana  vs.  Wijaya Karya Bangunan

Garda Tujuh Buana

Risk-Adjusted Performance

Very Weak

Over the last 90 days Garda Tujuh Buana 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 April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Wijaya Karya Bangunan

Risk-Adjusted Performance

Very Weak

Over the last 90 days Wijaya Karya Bangunan 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 Garda Tujuh and Wijaya Karya

The main advantage of trading using opposite Garda Tujuh and Wijaya Karya positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Garda Tujuh 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 Garda Tujuh Buana and Wijaya Karya Bangunan 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.

Check out your portfolio center.

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.