Correlation Between Perusahaan Perseroan and WOOLWORTHS

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

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

Diversification Opportunities for Perusahaan Perseroan and WOOLWORTHS

0.57

Correlation Coefficient

Perusahaan Perseroan  WOOLWORTHS

Very weak diversification

The 3 months correlation between Perusahaan and WOOLWORTHS is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Perusahaan Perseroan PT and WOOLWORTHS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WOOLWORTHS and Perusahaan Perseroan 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 Perusahaan Perseroan PT are associated (or correlated) with WOOLWORTHS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WOOLWORTHS has no effect on the direction of Perusahaan Perseroan i.e., Perusahaan Perseroan and WOOLWORTHS go up and down completely randomly.

Pair Corralation between Perusahaan Perseroan and WOOLWORTHS

Assuming the 90 days horizon Perusahaan Perseroan PT is expected to under-perform the WOOLWORTHS. In addition to that, Perusahaan Perseroan is 1.28 times more volatile than WOOLWORTHS. It trades about -0.13 of its total potential returns per unit of risk. WOOLWORTHS is currently generating about -0.02 per unit of volatility. If you would invest  1,747  in WOOLWORTHS on December 25, 2024 and sell it today you would lose (37.00) from holding WOOLWORTHS or give up 2.12% of portfolio value over 90 days.

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

Perusahaan Perseroan PT  vs.  WOOLWORTHS

Perusahaan Perseroan

Risk-Adjusted Performance

Very Weak

Over the last 90 days Perusahaan Perseroan PT has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

WOOLWORTHS

Risk-Adjusted Performance

Very Weak

Over the last 90 days WOOLWORTHS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, WOOLWORTHS is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Perusahaan Perseroan and WOOLWORTHS

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

The idea behind Perusahaan Perseroan PT and WOOLWORTHS 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.