Correlation Between Pratama Abadi and Wahana Inti

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

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

Diversification Opportunities for Pratama Abadi and Wahana Inti

-0.08

Correlation Coefficient

Pratama Abadi  Wahana Inti

Good diversification

The 3 months correlation between Pratama and Wahana is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Pratama Abadi Nusa and Wahana Inti MakmurTbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wahana Inti MakmurTbk and Pratama Abadi 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 Pratama Abadi Nusa are associated (or correlated) with Wahana Inti. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wahana Inti MakmurTbk has no effect on the direction of Pratama Abadi i.e., Pratama Abadi and Wahana Inti go up and down completely randomly.

Pair Corralation between Pratama Abadi and Wahana Inti

Assuming the 90 days trading horizon Pratama Abadi Nusa is expected to under-perform the Wahana Inti. In addition to that, Pratama Abadi is 1.01 times more volatile than Wahana Inti MakmurTbk. It trades about -0.07 of its total potential returns per unit of risk. Wahana Inti MakmurTbk is currently generating about 0.06 per unit of volatility. If you would invest  7,700  in Wahana Inti MakmurTbk on October 23, 2024 and sell it today you would earn a total of  200.00  from holding Wahana Inti MakmurTbk or generate 2.6% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	94.44%
Values	Daily Returns

Pratama Abadi Nusa  vs.  Wahana Inti MakmurTbk

Pratama Abadi Nusa

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Pratama Abadi Nusa are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Pratama Abadi may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Wahana Inti MakmurTbk

Risk-Adjusted Performance

0 of 100

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 February 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Pratama Abadi and Wahana Inti

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

The idea behind Pratama Abadi Nusa and Wahana Inti MakmurTbk 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.

Check out your portfolio center.

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.