Correlation Between Weha Transportasi and Guna Timur

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

Diversification Opportunities for Weha Transportasi and Guna Timur

0.86

Correlation Coefficient

Weha Transportasi  Guna Timur

Very poor diversification

The 3 months correlation between Weha and Guna is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Weha Transportasi Indonesia and Guna Timur Raya in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guna Timur Raya 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 Guna Timur. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guna Timur Raya has no effect on the direction of Weha Transportasi i.e., Weha Transportasi and Guna Timur go up and down completely randomly.

Pair Corralation between Weha Transportasi and Guna Timur

Assuming the 90 days trading horizon Weha Transportasi Indonesia is expected to generate 0.47 times more return on investment than Guna Timur. However, Weha Transportasi Indonesia is 2.11 times less risky than Guna Timur. It trades about -0.07 of its potential returns per unit of risk. Guna Timur Raya is currently generating about -0.08 per unit of risk. If you would invest  13,100  in Weha Transportasi Indonesia on September 13, 2024 and sell it today you would lose (1,200) from holding Weha Transportasi Indonesia or give up 9.16% of portfolio value over 90 days.

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

Weha Transportasi Indonesia  vs.  Guna Timur Raya

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 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.

Guna Timur Raya

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Guna Timur Raya 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 January 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 Guna Timur

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

The idea behind Weha Transportasi Indonesia and Guna Timur Raya 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.