Correlation Between Sentral Mitra and Wira Global

Can any of the company-specific risk be diversified away by investing in both Sentral Mitra and Wira Global 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 Sentral Mitra and Wira Global into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Sentral Mitra Informatika and Wira Global Solusi, you can compare the effects of market volatilities on Sentral Mitra and Wira Global 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 Sentral Mitra with a short position of Wira Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sentral Mitra and Wira Global.

Diversification Opportunities for Sentral Mitra and Wira Global

-0.82

Correlation Coefficient

Sentral Mitra  Wira Global

Pay attention - limited upside

The 3 months correlation between Sentral and Wira is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding Sentral Mitra Informatika and Wira Global Solusi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wira Global Solusi and Sentral Mitra 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 Sentral Mitra Informatika are associated (or correlated) with Wira Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wira Global Solusi has no effect on the direction of Sentral Mitra i.e., Sentral Mitra and Wira Global go up and down completely randomly.

Pair Corralation between Sentral Mitra and Wira Global

Assuming the 90 days trading horizon Sentral Mitra Informatika is expected to under-perform the Wira Global. But the stock apears to be less risky and, when comparing its historical volatility, Sentral Mitra Informatika is 1.5 times less risky than Wira Global. The stock trades about -0.11 of its potential returns per unit of risk. The Wira Global Solusi is currently generating about 0.33 of returns per unit of risk over similar time horizon. If you would invest  8,900  in Wira Global Solusi on December 30, 2024 and sell it today you would earn a total of  11,100  from holding Wira Global Solusi or generate 124.72% return on investment over 90 days.

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

Sentral Mitra Informatika  vs.  Wira Global Solusi

Sentral Mitra Informatika

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sentral Mitra Informatika 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.

Wira Global Solusi

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Wira Global Solusi are ranked lower than 25 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Wira Global disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sentral Mitra and Wira Global

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

The idea behind Sentral Mitra Informatika and Wira Global Solusi 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.