Correlation Between Sumber Tani and Wir Asia

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

By analyzing existing cross correlation between Sumber Tani Agung and Wir Asia Tbk, you can compare the effects of market volatilities on Sumber Tani and Wir Asia 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 Sumber Tani with a short position of Wir Asia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sumber Tani and Wir Asia.

Diversification Opportunities for Sumber Tani and Wir Asia

0.36

Correlation Coefficient

Sumber Tani  Wir Asia

Weak diversification

The 3 months correlation between Sumber and Wir is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Sumber Tani Agung and Wir Asia Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wir Asia Tbk and Sumber Tani 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 Sumber Tani Agung are associated (or correlated) with Wir Asia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wir Asia Tbk has no effect on the direction of Sumber Tani i.e., Sumber Tani and Wir Asia go up and down completely randomly.

Pair Corralation between Sumber Tani and Wir Asia

Assuming the 90 days trading horizon Sumber Tani is expected to generate 1.83 times less return on investment than Wir Asia. But when comparing it to its historical volatility, Sumber Tani Agung is 4.24 times less risky than Wir Asia. It trades about 0.11 of its potential returns per unit of risk. Wir Asia Tbk is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  8,400  in Wir Asia Tbk on December 21, 2024 and sell it today you would earn a total of  500.00  from holding Wir Asia Tbk or generate 5.95% return on investment over 90 days.

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

Sumber Tani Agung  vs.  Wir Asia Tbk

Sumber Tani Agung

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Sumber Tani Agung are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Sumber Tani may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Wir Asia Tbk

Risk-Adjusted Performance

Insignificant

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

Pair Trading with Sumber Tani and Wir Asia

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

The idea behind Sumber Tani Agung and Wir Asia Tbk 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.