Correlation Between Mitra Pinasthika and Wijaya Karya

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

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

Diversification Opportunities for Mitra Pinasthika and Wijaya Karya

0.82

Correlation Coefficient

Mitra Pinasthika  Wijaya Karya

Very poor diversification

The 3 months correlation between Mitra and Wijaya is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Mitra Pinasthika Mustika and Wijaya Karya Beton in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wijaya Karya Beton and Mitra Pinasthika 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 Mitra Pinasthika Mustika 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 Beton has no effect on the direction of Mitra Pinasthika i.e., Mitra Pinasthika and Wijaya Karya go up and down completely randomly.

Pair Corralation between Mitra Pinasthika and Wijaya Karya

Assuming the 90 days trading horizon Mitra Pinasthika is expected to generate 21.05 times less return on investment than Wijaya Karya. But when comparing it to its historical volatility, Mitra Pinasthika Mustika is 5.45 times less risky than Wijaya Karya. It trades about 0.02 of its potential returns per unit of risk. Wijaya Karya Beton is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  6,800  in Wijaya Karya Beton on September 5, 2024 and sell it today you would earn a total of  2,400  from holding Wijaya Karya Beton or generate 35.29% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	99.2%
Values	Daily Returns

Mitra Pinasthika Mustika  vs.  Wijaya Karya Beton

Mitra Pinasthika Mustika

Risk-Adjusted Performance

0 of 100

Very Weak

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

Wijaya Karya Beton

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Wijaya Karya Beton 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 January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Mitra Pinasthika and Wijaya Karya

The main advantage of trading using opposite Mitra Pinasthika and Wijaya Karya positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mitra Pinasthika 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 Mitra Pinasthika Mustika and Wijaya Karya Beton 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.