Correlation Between Merdeka Copper and PT Wahana

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

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

Diversification Opportunities for Merdeka Copper and PT Wahana

0.22

Correlation Coefficient

Merdeka Copper  PT Wahana

Modest diversification

The 3 months correlation between Merdeka and COCO is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Merdeka Copper Gold and PT Wahana Interfood in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PT Wahana Interfood and Merdeka Copper 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 Merdeka Copper Gold are associated (or correlated) with PT Wahana. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PT Wahana Interfood has no effect on the direction of Merdeka Copper i.e., Merdeka Copper and PT Wahana go up and down completely randomly.

Pair Corralation between Merdeka Copper and PT Wahana

Assuming the 90 days trading horizon Merdeka Copper Gold is expected to under-perform the PT Wahana. But the stock apears to be less risky and, when comparing its historical volatility, Merdeka Copper Gold is 1.22 times less risky than PT Wahana. The stock trades about -0.02 of its potential returns per unit of risk. The PT Wahana Interfood is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  8,200  in PT Wahana Interfood on December 30, 2024 and sell it today you would lose (800.00) from holding PT Wahana Interfood or give up 9.76% of portfolio value over 90 days.

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

Merdeka Copper Gold  vs.  PT Wahana Interfood

Merdeka Copper Gold

Risk-Adjusted Performance

Very Weak

Over the last 90 days Merdeka Copper Gold has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Merdeka Copper is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

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.

Pair Trading with Merdeka Copper and PT Wahana

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

The idea behind Merdeka Copper Gold and PT Wahana Interfood 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.