Correlation Between Weha Transportasi and Exploitasi Energi

Can any of the company-specific risk be diversified away by investing in both Weha Transportasi and Exploitasi Energi 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 Exploitasi Energi 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 Exploitasi Energi Indonesia, you can compare the effects of market volatilities on Weha Transportasi and Exploitasi Energi 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 Exploitasi Energi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Weha Transportasi and Exploitasi Energi.

Diversification Opportunities for Weha Transportasi and Exploitasi Energi

0.05

Correlation Coefficient

Weha Transportasi  Exploitasi Energi

Significant diversification

The 3 months correlation between Weha and Exploitasi is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Weha Transportasi Indonesia and Exploitasi Energi Indonesia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Exploitasi Energi 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 Exploitasi Energi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Exploitasi Energi has no effect on the direction of Weha Transportasi i.e., Weha Transportasi and Exploitasi Energi go up and down completely randomly.

Pair Corralation between Weha Transportasi and Exploitasi Energi

Assuming the 90 days trading horizon Weha Transportasi Indonesia is expected to under-perform the Exploitasi Energi. But the stock apears to be less risky and, when comparing its historical volatility, Weha Transportasi Indonesia is 3.24 times less risky than Exploitasi Energi. The stock trades about -0.05 of its potential returns per unit of risk. The Exploitasi Energi Indonesia is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  1,900  in Exploitasi Energi Indonesia on December 24, 2024 and sell it today you would earn a total of  1,800  from holding Exploitasi Energi Indonesia or generate 94.74% return on investment over 90 days.

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

Weha Transportasi Indonesia  vs.  Exploitasi Energi Indonesia

Weha Transportasi

Risk-Adjusted Performance

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 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.

Exploitasi Energi

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Exploitasi Energi Indonesia are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Exploitasi Energi disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Weha Transportasi and Exploitasi Energi

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

The idea behind Weha Transportasi Indonesia and Exploitasi Energi Indonesia 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.