Correlation Between Matahari Department and Wijaya Karya

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

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

Diversification Opportunities for Matahari Department and Wijaya Karya

-0.8

Correlation Coefficient

Matahari Department  Wijaya Karya

Pay attention - limited upside

The 3 months correlation between Matahari and Wijaya is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding Matahari Department Store 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 Matahari Department 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 Matahari Department Store 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 Matahari Department i.e., Matahari Department and Wijaya Karya go up and down completely randomly.

Pair Corralation between Matahari Department and Wijaya Karya

Assuming the 90 days trading horizon Matahari Department Store is expected to generate 0.87 times more return on investment than Wijaya Karya. However, Matahari Department Store is 1.15 times less risky than Wijaya Karya. It trades about 0.03 of its potential returns per unit of risk. Wijaya Karya Bangunan is currently generating about -0.37 per unit of risk. If you would invest  152,500  in Matahari Department Store on December 1, 2024 and sell it today you would earn a total of  1,500  from holding Matahari Department Store or generate 0.98% return on investment over 90 days.

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

Matahari Department Store  vs.  Wijaya Karya Bangunan

Matahari Department Store

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Matahari Department Store are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Matahari Department may actually be approaching a critical reversion point that can send shares even higher in April 2025.

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 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.

Pair Trading with Matahari Department and Wijaya Karya

The main advantage of trading using opposite Matahari Department and Wijaya Karya positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Matahari Department 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 Matahari Department Store 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.

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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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.