Correlation Between Wahana Inti and Cisarua Mountain

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

By analyzing existing cross correlation between Wahana Inti MakmurTbk and Cisarua Mountain Dairy, you can compare the effects of market volatilities on Wahana Inti and Cisarua Mountain 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 Wahana Inti with a short position of Cisarua Mountain. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wahana Inti and Cisarua Mountain.

Diversification Opportunities for Wahana Inti and Cisarua Mountain

0.76

Correlation Coefficient

Wahana Inti  Cisarua Mountain

Poor diversification

The 3 months correlation between Wahana and Cisarua is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Wahana Inti MakmurTbk and Cisarua Mountain Dairy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cisarua Mountain Dairy and Wahana Inti 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 Wahana Inti MakmurTbk are associated (or correlated) with Cisarua Mountain. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cisarua Mountain Dairy has no effect on the direction of Wahana Inti i.e., Wahana Inti and Cisarua Mountain go up and down completely randomly.

Pair Corralation between Wahana Inti and Cisarua Mountain

Assuming the 90 days trading horizon Wahana Inti MakmurTbk is expected to under-perform the Cisarua Mountain. In addition to that, Wahana Inti is 1.14 times more volatile than Cisarua Mountain Dairy. It trades about -0.18 of its total potential returns per unit of risk. Cisarua Mountain Dairy is currently generating about -0.14 per unit of volatility. If you would invest  496,000  in Cisarua Mountain Dairy on December 22, 2024 and sell it today you would lose (100,000) from holding Cisarua Mountain Dairy or give up 20.16% of portfolio value over 90 days.

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

Wahana Inti MakmurTbk  vs.  Cisarua Mountain Dairy

Wahana Inti MakmurTbk

Risk-Adjusted Performance

Very Weak

Over the last 90 days Wahana Inti MakmurTbk 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.

Cisarua Mountain Dairy

Risk-Adjusted Performance

Very Weak

Over the last 90 days Cisarua Mountain Dairy 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 Wahana Inti and Cisarua Mountain

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

The idea behind Wahana Inti MakmurTbk and Cisarua Mountain Dairy 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.