Correlation Between Wahana Inti and RMK Energy

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Can any of the company-specific risk be diversified away by investing in both Wahana Inti and RMK Energy 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 Wahana Inti and RMK Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wahana Inti MakmurTbk and RMK Energy PT, you can compare the effects of market volatilities on Wahana Inti and RMK Energy 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 Wahana Inti with a short position of RMK Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wahana Inti and RMK Energy.

Diversification Opportunities for Wahana Inti and RMK Energy

0.4
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Wahana and RMK is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Wahana Inti MakmurTbk and RMK Energy PT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RMK Energy PT and Wahana Inti 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 Wahana Inti MakmurTbk are associated (or correlated) with RMK Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RMK Energy PT has no effect on the direction of Wahana Inti i.e., Wahana Inti and RMK Energy go up and down completely randomly.

Pair Corralation between Wahana Inti and RMK Energy

Assuming the 90 days trading horizon Wahana Inti MakmurTbk is expected to generate 2.06 times more return on investment than RMK Energy. However, Wahana Inti is 2.06 times more volatile than RMK Energy PT. It trades about 0.04 of its potential returns per unit of risk. RMK Energy PT is currently generating about -0.07 per unit of risk. If you would invest  8,000  in Wahana Inti MakmurTbk on September 18, 2024 and sell it today you would earn a total of  100.00  from holding Wahana Inti MakmurTbk or generate 1.25% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Wahana Inti MakmurTbk  vs.  RMK Energy PT

 Performance 
       Timeline  
Wahana Inti MakmurTbk 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Wahana Inti MakmurTbk 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.
RMK Energy PT 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days RMK Energy PT 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.

Wahana Inti and RMK Energy Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Wahana Inti and RMK Energy

The main advantage of trading using opposite Wahana Inti and RMK Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wahana Inti position performs unexpectedly, RMK Energy 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 RMK Energy will offset losses from the drop in RMK Energy's long position.
The idea behind Wahana Inti MakmurTbk and RMK Energy 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.

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