Correlation Between Wir Asia and PT Cilacap

Can any of the company-specific risk be diversified away by investing in both Wir Asia and PT Cilacap 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 Wir Asia and PT Cilacap into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Wir Asia Tbk and PT Cilacap Samudera, you can compare the effects of market volatilities on Wir Asia and PT Cilacap 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 Wir Asia with a short position of PT Cilacap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wir Asia and PT Cilacap.

Diversification Opportunities for Wir Asia and PT Cilacap

-0.46

Correlation Coefficient

Wir Asia  PT Cilacap

Very good diversification

The 3 months correlation between Wir and ASHA is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Wir Asia Tbk and PT Cilacap Samudera in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PT Cilacap Samudera and Wir Asia 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 Wir Asia Tbk are associated (or correlated) with PT Cilacap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PT Cilacap Samudera has no effect on the direction of Wir Asia i.e., Wir Asia and PT Cilacap go up and down completely randomly.

Pair Corralation between Wir Asia and PT Cilacap

Assuming the 90 days trading horizon Wir Asia Tbk is expected to generate 0.9 times more return on investment than PT Cilacap. However, Wir Asia Tbk is 1.12 times less risky than PT Cilacap. It trades about 0.12 of its potential returns per unit of risk. PT Cilacap Samudera is currently generating about 0.03 per unit of risk. If you would invest  9,200  in Wir Asia Tbk on December 3, 2024 and sell it today you would earn a total of  3,300  from holding Wir Asia Tbk or generate 35.87% return on investment over 90 days.

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

Wir Asia Tbk  vs.  PT Cilacap Samudera

Wir Asia Tbk

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Wir Asia Tbk are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Wir Asia disclosed solid returns over the last few months and may actually be approaching a breakup point.

PT Cilacap Samudera

Risk-Adjusted Performance

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in PT Cilacap Samudera are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, PT Cilacap may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Wir Asia and PT Cilacap

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

The idea behind Wir Asia Tbk and PT Cilacap Samudera 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.