Correlation Between Bank Ina and Wijaya Karya

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

By analyzing existing cross correlation between Bank Ina Perdana and Wijaya Karya Bangunan, you can compare the effects of market volatilities on Bank Ina and Wijaya 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 Bank Ina with a short position of Wijaya Karya. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank Ina and Wijaya Karya.

Diversification Opportunities for Bank Ina and Wijaya Karya

-0.36

Correlation Coefficient

Bank Ina  Wijaya Karya

Very good diversification

The 3 months correlation between Bank and Wijaya is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Bank Ina Perdana and Wijaya Karya Bangunan in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wijaya Karya Bangunan and Bank Ina 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 Bank Ina Perdana are associated (or correlated) with Wijaya Karya. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wijaya Karya Bangunan has no effect on the direction of Bank Ina i.e., Bank Ina and Wijaya Karya go up and down completely randomly.

Pair Corralation between Bank Ina and Wijaya Karya

Assuming the 90 days trading horizon Bank Ina Perdana is expected to generate 0.49 times more return on investment than Wijaya Karya. However, Bank Ina Perdana is 2.05 times less risky than Wijaya Karya. It trades about 0.0 of its potential returns per unit of risk. Wijaya Karya Bangunan is currently generating about -0.14 per unit of risk. If you would invest  405,000  in Bank Ina Perdana on September 14, 2024 and sell it today you would lose (1,000.00) from holding Bank Ina Perdana or give up 0.25% of portfolio value over 90 days.

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

Bank Ina Perdana  vs.  Wijaya Karya Bangunan

Bank Ina Perdana

Risk-Adjusted Performance

0 of 100

Very Weak

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

Wijaya Karya Bangunan

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Wijaya Karya Bangunan 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 Bank Ina and Wijaya Karya

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

The idea behind Bank Ina Perdana and Wijaya Karya Bangunan 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..