Correlation Between Wijaya Karya and Mitrabahtera Segara

Can any of the company-specific risk be diversified away by investing in both Wijaya Karya and Mitrabahtera Segara 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 Wijaya Karya and Mitrabahtera Segara into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Wijaya Karya Bangunan and Mitrabahtera Segara Sejati, you can compare the effects of market volatilities on Wijaya Karya and Mitrabahtera Segara 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 Wijaya Karya with a short position of Mitrabahtera Segara. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wijaya Karya and Mitrabahtera Segara.

Diversification Opportunities for Wijaya Karya and Mitrabahtera Segara

0.77

Correlation Coefficient

Wijaya Karya  Mitrabahtera Segara

Poor diversification

The 3 months correlation between Wijaya and Mitrabahtera is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Wijaya Karya Bangunan and Mitrabahtera Segara Sejati in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mitrabahtera Segara and Wijaya Karya 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 Wijaya Karya Bangunan are associated (or correlated) with Mitrabahtera Segara. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mitrabahtera Segara has no effect on the direction of Wijaya Karya i.e., Wijaya Karya and Mitrabahtera Segara go up and down completely randomly.

Pair Corralation between Wijaya Karya and Mitrabahtera Segara

Assuming the 90 days trading horizon Wijaya Karya Bangunan is expected to under-perform the Mitrabahtera Segara. In addition to that, Wijaya Karya is 1.06 times more volatile than Mitrabahtera Segara Sejati. It trades about -0.22 of its total potential returns per unit of risk. Mitrabahtera Segara Sejati is currently generating about -0.14 per unit of volatility. If you would invest  124,000  in Mitrabahtera Segara Sejati on October 22, 2024 and sell it today you would lose (21,500) from holding Mitrabahtera Segara Sejati or give up 17.34% of portfolio value over 90 days.

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

Wijaya Karya Bangunan  vs.  Mitrabahtera Segara Sejati

Wijaya Karya Bangunan

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Wijaya Karya Bangunan 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 February 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Mitrabahtera Segara

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mitrabahtera Segara Sejati 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 February 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Wijaya Karya and Mitrabahtera Segara

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

The idea behind Wijaya Karya Bangunan and Mitrabahtera Segara Sejati 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.

Check out your portfolio center.

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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.