Correlation Between Weha Transportasi and Mitrabahtera Segara

Can any of the company-specific risk be diversified away by investing in both Weha Transportasi 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 Weha Transportasi and Mitrabahtera Segara 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 Mitrabahtera Segara Sejati, you can compare the effects of market volatilities on Weha Transportasi 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 Weha Transportasi with a short position of Mitrabahtera Segara. Check out your portfolio center. Please also check ongoing floating volatility patterns of Weha Transportasi and Mitrabahtera Segara.

Diversification Opportunities for Weha Transportasi and Mitrabahtera Segara

0.78

Correlation Coefficient

Weha Transportasi  Mitrabahtera Segara

Poor diversification

The 3 months correlation between Weha and Mitrabahtera is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Weha Transportasi Indonesia and Mitrabahtera Segara Sejati in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mitrabahtera Segara 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 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 Weha Transportasi i.e., Weha Transportasi and Mitrabahtera Segara go up and down completely randomly.

Pair Corralation between Weha Transportasi and Mitrabahtera Segara

Assuming the 90 days trading horizon Weha Transportasi Indonesia is expected to under-perform the Mitrabahtera Segara. In addition to that, Weha Transportasi is 1.11 times more volatile than Mitrabahtera Segara Sejati. It trades about -0.27 of its total potential returns per unit of risk. Mitrabahtera Segara Sejati is currently generating about -0.08 per unit of volatility. If you would invest  108,000  in Mitrabahtera Segara Sejati on November 20, 2024 and sell it today you would lose (8,000) from holding Mitrabahtera Segara Sejati or give up 7.41% of portfolio value over 90 days.

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

Weha Transportasi Indonesia  vs.  Mitrabahtera Segara Sejati

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 conflicting performance in the last few months, the Stock's forward-looking signals remain quite persistent which may send shares a bit higher in March 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Mitrabahtera Segara

Risk-Adjusted Performance

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 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.

Pair Trading with Weha Transportasi and Mitrabahtera Segara

The main advantage of trading using opposite Weha Transportasi and Mitrabahtera Segara positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Weha Transportasi 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 Weha Transportasi Indonesia 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.

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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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.