Correlation Between Waskita Beton and Adhi Karya

Can any of the company-specific risk be diversified away by investing in both Waskita Beton and Adhi Karya 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 Waskita Beton and Adhi Karya into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Waskita Beton Precast and Adhi Karya Persero, you can compare the effects of market volatilities on Waskita Beton and Adhi Karya 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 Waskita Beton with a short position of Adhi Karya. Check out your portfolio center. Please also check ongoing floating volatility patterns of Waskita Beton and Adhi Karya.

Diversification Opportunities for Waskita Beton and Adhi Karya

0.9

Correlation Coefficient

Waskita Beton  Adhi Karya

Almost no diversification

The 3 months correlation between Waskita and Adhi is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Waskita Beton Precast and Adhi Karya Persero in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Adhi Karya Persero and Waskita Beton 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 Waskita Beton Precast are associated (or correlated) with Adhi Karya. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Adhi Karya Persero has no effect on the direction of Waskita Beton i.e., Waskita Beton and Adhi Karya go up and down completely randomly.

Pair Corralation between Waskita Beton and Adhi Karya

Assuming the 90 days trading horizon Waskita Beton Precast is expected to under-perform the Adhi Karya. But the stock apears to be less risky and, when comparing its historical volatility, Waskita Beton Precast is 1.16 times less risky than Adhi Karya. The stock trades about -0.02 of its potential returns per unit of risk. The Adhi Karya Persero is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  21,200  in Adhi Karya Persero on December 30, 2024 and sell it today you would earn a total of  2,800  from holding Adhi Karya Persero or generate 13.21% return on investment over 90 days.

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

Waskita Beton Precast  vs.  Adhi Karya Persero

Waskita Beton Precast

Risk-Adjusted Performance

Very Weak

Over the last 90 days Waskita Beton Precast 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.

Adhi Karya Persero

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Adhi Karya Persero are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Adhi Karya disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Waskita Beton and Adhi Karya

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

The idea behind Waskita Beton Precast and Adhi Karya Persero 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.