Correlation Between Wulandari Bangun and Equity Development

Can any of the company-specific risk be diversified away by investing in both Wulandari Bangun and Equity Development 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 Wulandari Bangun and Equity Development into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Wulandari Bangun Laksana and Equity Development Investment, you can compare the effects of market volatilities on Wulandari Bangun and Equity Development 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 Wulandari Bangun with a short position of Equity Development. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wulandari Bangun and Equity Development.

Diversification Opportunities for Wulandari Bangun and Equity Development

-0.23

Correlation Coefficient

Wulandari Bangun  Equity Development

Very good diversification

The 3 months correlation between Wulandari and Equity is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Wulandari Bangun Laksana and Equity Development Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Equity Development and Wulandari Bangun 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 Wulandari Bangun Laksana are associated (or correlated) with Equity Development. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Equity Development has no effect on the direction of Wulandari Bangun i.e., Wulandari Bangun and Equity Development go up and down completely randomly.

Pair Corralation between Wulandari Bangun and Equity Development

Assuming the 90 days trading horizon Wulandari Bangun Laksana is expected to under-perform the Equity Development. But the stock apears to be less risky and, when comparing its historical volatility, Wulandari Bangun Laksana is 1.56 times less risky than Equity Development. The stock trades about -0.09 of its potential returns per unit of risk. The Equity Development Investment is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  5,300  in Equity Development Investment on September 21, 2024 and sell it today you would earn a total of  500.00  from holding Equity Development Investment or generate 9.43% return on investment over 90 days.

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

Wulandari Bangun Laksana  vs.  Equity Development Investment

Wulandari Bangun Laksana

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Wulandari Bangun Laksana 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.

Equity Development

Risk-Adjusted Performance

4 of 100

Insignificant

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

Pair Trading with Wulandari Bangun and Equity Development

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

The idea behind Wulandari Bangun Laksana and Equity Development Investment 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.