Correlation Between Widodo Makmur and Ulima Nitra

Can any of the company-specific risk be diversified away by investing in both Widodo Makmur and Ulima Nitra 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 Ulima Nitra 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 Ulima Nitra PT, you can compare the effects of market volatilities on Widodo Makmur and Ulima Nitra 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 Ulima Nitra. Check out your portfolio center. Please also check ongoing floating volatility patterns of Widodo Makmur and Ulima Nitra.

Diversification Opportunities for Widodo Makmur and Ulima Nitra

-0.08

Correlation Coefficient

Widodo Makmur  Ulima Nitra

Good diversification

The 3 months correlation between Widodo and Ulima is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Widodo Makmur Unggas and Ulima Nitra PT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ulima Nitra PT 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 Ulima Nitra. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ulima Nitra PT has no effect on the direction of Widodo Makmur i.e., Widodo Makmur and Ulima Nitra go up and down completely randomly.

Pair Corralation between Widodo Makmur and Ulima Nitra

Assuming the 90 days trading horizon Widodo Makmur Unggas is expected to generate 1.35 times more return on investment than Ulima Nitra. However, Widodo Makmur is 1.35 times more volatile than Ulima Nitra PT. It trades about -0.04 of its potential returns per unit of risk. Ulima Nitra PT is currently generating about -0.08 per unit of risk. If you would invest  1,000.00  in Widodo Makmur Unggas on December 4, 2024 and sell it today you would lose (200.00) from holding Widodo Makmur Unggas or give up 20.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.28%
Values	Daily Returns

Widodo Makmur Unggas  vs.  Ulima Nitra PT

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 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.

Ulima Nitra PT

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ulima Nitra PT 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 Widodo Makmur and Ulima Nitra

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

The idea behind Widodo Makmur Unggas and Ulima Nitra PT 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 Transaction History module to view history of all your transactions and understand their impact on performance.