Correlation Between Steady Safe and Wahana Pronatural

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

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

Diversification Opportunities for Steady Safe and Wahana Pronatural

-0.19

Correlation Coefficient

Steady Safe  Wahana Pronatural

Good diversification

The 3 months correlation between Steady and Wahana is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Steady Safe TBK and Wahana Pronatural in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wahana Pronatural and Steady Safe 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 Steady Safe 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 Steady Safe i.e., Steady Safe and Wahana Pronatural go up and down completely randomly.

Pair Corralation between Steady Safe and Wahana Pronatural

Assuming the 90 days trading horizon Steady Safe TBK is expected to generate 1.06 times more return on investment than Wahana Pronatural. However, Steady Safe is 1.06 times more volatile than Wahana Pronatural. It trades about 0.08 of its potential returns per unit of risk. Wahana Pronatural is currently generating about -0.04 per unit of risk. If you would invest  22,800  in Steady Safe TBK on December 1, 2024 and sell it today you would earn a total of  1,800  from holding Steady Safe TBK or generate 7.89% return on investment over 90 days.

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

Steady Safe TBK  vs.  Wahana Pronatural

Steady Safe TBK

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Steady Safe TBK are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Steady Safe 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 Steady Safe and Wahana Pronatural

The main advantage of trading using opposite Steady Safe and Wahana Pronatural positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Steady Safe 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 Steady Safe 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.