Correlation Between Wijaya Karya and PP Presisi

Can any of the company-specific risk be diversified away by investing in both Wijaya Karya and PP Presisi 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 PP Presisi 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 PP Presisi Tbk, you can compare the effects of market volatilities on Wijaya Karya and PP Presisi 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 PP Presisi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wijaya Karya and PP Presisi.

Diversification Opportunities for Wijaya Karya and PP Presisi

0.74

Correlation Coefficient

Wijaya Karya  PP Presisi

Poor diversification

The 3 months correlation between Wijaya and PPRE is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Wijaya Karya Bangunan and PP Presisi Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PP Presisi Tbk 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 PP Presisi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PP Presisi Tbk has no effect on the direction of Wijaya Karya i.e., Wijaya Karya and PP Presisi go up and down completely randomly.

Pair Corralation between Wijaya Karya and PP Presisi

Assuming the 90 days trading horizon Wijaya Karya Bangunan is expected to under-perform the PP Presisi. But the stock apears to be less risky and, when comparing its historical volatility, Wijaya Karya Bangunan is 1.07 times less risky than PP Presisi. The stock trades about -0.02 of its potential returns per unit of risk. The PP Presisi Tbk is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  5,500  in PP Presisi Tbk on December 29, 2024 and sell it today you would earn a total of  500.00  from holding PP Presisi Tbk or generate 9.09% return on investment over 90 days.

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

Wijaya Karya Bangunan  vs.  PP Presisi Tbk

Wijaya Karya Bangunan

Risk-Adjusted Performance

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 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.

PP Presisi Tbk

Risk-Adjusted Performance

Insignificant

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

Pair Trading with Wijaya Karya and PP Presisi

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

The idea behind Wijaya Karya Bangunan and PP Presisi 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.