Correlation Between Cisadane Sawit and Widodo Makmur

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

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

Diversification Opportunities for Cisadane Sawit and Widodo Makmur

-0.19

Correlation Coefficient

Cisadane Sawit  Widodo Makmur

Good diversification

The 3 months correlation between Cisadane and Widodo is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Cisadane Sawit Raya and Widodo Makmur Unggas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Widodo Makmur Unggas and Cisadane Sawit 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 Cisadane Sawit Raya are associated (or correlated) with Widodo Makmur. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Widodo Makmur Unggas has no effect on the direction of Cisadane Sawit i.e., Cisadane Sawit and Widodo Makmur go up and down completely randomly.

Pair Corralation between Cisadane Sawit and Widodo Makmur

Assuming the 90 days trading horizon Cisadane Sawit Raya is expected to generate 0.31 times more return on investment than Widodo Makmur. However, Cisadane Sawit Raya is 3.21 times less risky than Widodo Makmur. It trades about 0.17 of its potential returns per unit of risk. Widodo Makmur Unggas is currently generating about -0.03 per unit of risk. If you would invest  60,500  in Cisadane Sawit Raya on September 17, 2024 and sell it today you would earn a total of  12,000  from holding Cisadane Sawit Raya or generate 19.83% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.46%
Values	Daily Returns

Cisadane Sawit Raya  vs.  Widodo Makmur Unggas

Cisadane Sawit Raya

Risk-Adjusted Performance

13 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Cisadane Sawit Raya are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Cisadane Sawit disclosed solid returns over the last few months and may actually be approaching a breakup point.

Widodo Makmur Unggas

Risk-Adjusted Performance

0 of 100

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 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.

Pair Trading with Cisadane Sawit and Widodo Makmur

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

The idea behind Cisadane Sawit Raya and Widodo Makmur Unggas 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.