Correlation Between Weha Transportasi and Surya Esa

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

Diversification Opportunities for Weha Transportasi and Surya Esa

0.29

Correlation Coefficient

Weha Transportasi  Surya Esa

Modest diversification

The 3 months correlation between Weha and Surya is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Weha Transportasi Indonesia and Surya Esa Perkasa in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Surya Esa Perkasa 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 Surya Esa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Surya Esa Perkasa has no effect on the direction of Weha Transportasi i.e., Weha Transportasi and Surya Esa go up and down completely randomly.

Pair Corralation between Weha Transportasi and Surya Esa

Assuming the 90 days trading horizon Weha Transportasi Indonesia is expected to generate 0.94 times more return on investment than Surya Esa. However, Weha Transportasi Indonesia is 1.07 times less risky than Surya Esa. It trades about -0.02 of its potential returns per unit of risk. Surya Esa Perkasa is currently generating about -0.24 per unit of risk. If you would invest  10,700  in Weha Transportasi Indonesia on December 21, 2024 and sell it today you would lose (400.00) from holding Weha Transportasi Indonesia or give up 3.74% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.28%
Values	Daily Returns

Weha Transportasi Indonesia  vs.  Surya Esa Perkasa

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 quite persistent forward-looking signals, Weha Transportasi is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Surya Esa Perkasa

Risk-Adjusted Performance

Very Weak

Over the last 90 days Surya Esa Perkasa 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 April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Weha Transportasi and Surya Esa

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

The idea behind Weha Transportasi Indonesia and Surya Esa Perkasa 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.