Correlation Between Rig Tenders and Wahana Pronatural

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

By analyzing existing cross correlation between Rig Tenders Tbk and Wahana Pronatural, you can compare the effects of market volatilities on Rig Tenders and Wahana Pronatural 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 Rig Tenders with a short position of Wahana Pronatural. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rig Tenders and Wahana Pronatural.

Diversification Opportunities for Rig Tenders and Wahana Pronatural

-0.12

Correlation Coefficient

Rig Tenders  Wahana Pronatural

Good diversification

The 3 months correlation between Rig and Wahana is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Rig Tenders Tbk and Wahana Pronatural in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wahana Pronatural and Rig Tenders 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 Rig Tenders Tbk are associated (or correlated) with Wahana Pronatural. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wahana Pronatural has no effect on the direction of Rig Tenders i.e., Rig Tenders and Wahana Pronatural go up and down completely randomly.

Pair Corralation between Rig Tenders and Wahana Pronatural

Assuming the 90 days trading horizon Rig Tenders is expected to generate 2.7 times less return on investment than Wahana Pronatural. But when comparing it to its historical volatility, Rig Tenders Tbk is 1.31 times less risky than Wahana Pronatural. It trades about 0.05 of its potential returns per unit of risk. Wahana Pronatural is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  9,300  in Wahana Pronatural on December 1, 2024 and sell it today you would earn a total of  3,600  from holding Wahana Pronatural or generate 38.71% return on investment over 90 days.

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

Rig Tenders Tbk  vs.  Wahana Pronatural

Rig Tenders Tbk

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Rig Tenders Tbk are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Rig Tenders disclosed solid returns over the last few months and may actually be approaching a breakup point.

Wahana Pronatural

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Wahana Pronatural are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Wahana Pronatural disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Rig Tenders and Wahana Pronatural

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

The idea behind Rig Tenders Tbk and Wahana Pronatural 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.