Correlation Between Ulima Nitra and Widodo Makmur

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

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

Diversification Opportunities for Ulima Nitra and Widodo Makmur

-0.28

Correlation Coefficient

Ulima Nitra  Widodo Makmur

Very good diversification

The 3 months correlation between Ulima and Widodo is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Ulima Nitra PT and Widodo Makmur Unggas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Widodo Makmur Unggas and Ulima Nitra 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 Ulima Nitra PT are associated (or correlated) with Widodo Makmur. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Widodo Makmur Unggas has no effect on the direction of Ulima Nitra i.e., Ulima Nitra and Widodo Makmur go up and down completely randomly.

Pair Corralation between Ulima Nitra and Widodo Makmur

Assuming the 90 days trading horizon Ulima Nitra PT is expected to under-perform the Widodo Makmur. But the stock apears to be less risky and, when comparing its historical volatility, Ulima Nitra PT is 1.11 times less risky than Widodo Makmur. The stock trades about -0.07 of its potential returns per unit of risk. The Widodo Makmur Unggas is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  1,200  in Widodo Makmur Unggas on September 15, 2024 and sell it today you would lose (200.00) from holding Widodo Makmur Unggas or give up 16.67% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Ulima Nitra PT  vs.  Widodo Makmur Unggas

Ulima Nitra PT

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ulima Nitra PT 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 January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Widodo Makmur Unggas

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Widodo Makmur Unggas has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's forward-looking signals remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with Ulima Nitra and Widodo Makmur

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

The idea behind Ulima Nitra PT and Widodo Makmur Unggas 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.