Correlation Between Widodo Makmur and Triputra Agro

Can any of the company-specific risk be diversified away by investing in both Widodo Makmur and Triputra Agro 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 Widodo Makmur and Triputra Agro into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Widodo Makmur Unggas and Triputra Agro Persada, you can compare the effects of market volatilities on Widodo Makmur and Triputra Agro 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 Widodo Makmur with a short position of Triputra Agro. Check out your portfolio center. Please also check ongoing floating volatility patterns of Widodo Makmur and Triputra Agro.

Diversification Opportunities for Widodo Makmur and Triputra Agro

0.09

Correlation Coefficient

Widodo Makmur  Triputra Agro

Significant diversification

The 3 months correlation between Widodo and Triputra is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Widodo Makmur Unggas and Triputra Agro Persada in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Triputra Agro Persada and Widodo Makmur 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 Widodo Makmur Unggas are associated (or correlated) with Triputra Agro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Triputra Agro Persada has no effect on the direction of Widodo Makmur i.e., Widodo Makmur and Triputra Agro go up and down completely randomly.

Pair Corralation between Widodo Makmur and Triputra Agro

Assuming the 90 days trading horizon Widodo Makmur Unggas is expected to under-perform the Triputra Agro. In addition to that, Widodo Makmur is 2.52 times more volatile than Triputra Agro Persada. It trades about -0.01 of its total potential returns per unit of risk. Triputra Agro Persada is currently generating about -0.02 per unit of volatility. If you would invest  84,000  in Triputra Agro Persada on December 3, 2024 and sell it today you would lose (3,000) from holding Triputra Agro Persada or give up 3.57% of portfolio value over 90 days.

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

Widodo Makmur Unggas  vs.  Triputra Agro Persada

Widodo Makmur Unggas

Risk-Adjusted Performance

Very Weak

Over the last 90 days Widodo Makmur Unggas has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Widodo Makmur is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Triputra Agro Persada

Risk-Adjusted Performance

Very Weak

Over the last 90 days Triputra Agro Persada has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Triputra Agro is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Widodo Makmur and Triputra Agro

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

The idea behind Widodo Makmur Unggas and Triputra Agro Persada 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..