Correlation Between Wahana Pronatural and Rig Tenders

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

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

Diversification Opportunities for Wahana Pronatural and Rig Tenders

0.52

Correlation Coefficient

Wahana Pronatural  Rig Tenders

Very weak diversification

The 3 months correlation between Wahana and Rig is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Wahana Pronatural and Rig Tenders Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rig Tenders Tbk and Wahana Pronatural 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 Wahana Pronatural are associated (or correlated) with Rig Tenders. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rig Tenders Tbk has no effect on the direction of Wahana Pronatural i.e., Wahana Pronatural and Rig Tenders go up and down completely randomly.

Pair Corralation between Wahana Pronatural and Rig Tenders

Assuming the 90 days trading horizon Wahana Pronatural is expected to under-perform the Rig Tenders. But the stock apears to be less risky and, when comparing its historical volatility, Wahana Pronatural is 1.11 times less risky than Rig Tenders. The stock trades about -0.19 of its potential returns per unit of risk. The Rig Tenders Tbk is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  59,500  in Rig Tenders Tbk on September 1, 2024 and sell it today you would earn a total of  500.00  from holding Rig Tenders Tbk or generate 0.84% return on investment over 90 days.

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

Wahana Pronatural  vs.  Rig Tenders Tbk

Wahana Pronatural

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Wahana Pronatural 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.

Rig Tenders Tbk

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Rig Tenders Tbk has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Rig Tenders is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Wahana Pronatural and Rig Tenders

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

The idea behind Wahana Pronatural and Rig Tenders 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..