Correlation Between Weha Transportasi and Benakat Petroleum

Can any of the company-specific risk be diversified away by investing in both Weha Transportasi and Benakat Petroleum 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 Weha Transportasi and Benakat Petroleum into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Weha Transportasi Indonesia and Benakat Petroleum Energy, you can compare the effects of market volatilities on Weha Transportasi and Benakat Petroleum 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 Weha Transportasi with a short position of Benakat Petroleum. Check out your portfolio center. Please also check ongoing floating volatility patterns of Weha Transportasi and Benakat Petroleum.

Diversification Opportunities for Weha Transportasi and Benakat Petroleum

0.44

Correlation Coefficient

Weha Transportasi  Benakat Petroleum

Very weak diversification

The 3 months correlation between Weha and Benakat is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Weha Transportasi Indonesia and Benakat Petroleum Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Benakat Petroleum Energy and Weha Transportasi 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 Weha Transportasi Indonesia are associated (or correlated) with Benakat Petroleum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Benakat Petroleum Energy has no effect on the direction of Weha Transportasi i.e., Weha Transportasi and Benakat Petroleum go up and down completely randomly.

Pair Corralation between Weha Transportasi and Benakat Petroleum

Assuming the 90 days trading horizon Weha Transportasi Indonesia is expected to under-perform the Benakat Petroleum. But the stock apears to be less risky and, when comparing its historical volatility, Weha Transportasi Indonesia is 2.48 times less risky than Benakat Petroleum. The stock trades about 0.0 of its potential returns per unit of risk. The Benakat Petroleum Energy is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  6,200  in Benakat Petroleum Energy on September 2, 2024 and sell it today you would earn a total of  1,600  from holding Benakat Petroleum Energy or generate 25.81% return on investment over 90 days.

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

Weha Transportasi Indonesia  vs.  Benakat Petroleum Energy

Weha Transportasi

Risk-Adjusted Performance

0 of 100

Very Weak

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

Benakat Petroleum Energy

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Benakat Petroleum Energy are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Benakat Petroleum disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Weha Transportasi and Benakat Petroleum

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

The idea behind Weha Transportasi Indonesia and Benakat Petroleum Energy 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.