Correlation Between Wahana Inti and Sumber Mas

Can any of the company-specific risk be diversified away by investing in both Wahana Inti and Sumber Mas 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 Sumber Mas 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 Sumber Mas Konstruksi, you can compare the effects of market volatilities on Wahana Inti and Sumber Mas 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 Sumber Mas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wahana Inti and Sumber Mas.

Diversification Opportunities for Wahana Inti and Sumber Mas

-0.43

Correlation Coefficient

Wahana Inti  Sumber Mas

Very good diversification

The 3 months correlation between Wahana and Sumber is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Wahana Inti MakmurTbk and Sumber Mas Konstruksi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sumber Mas Konstruksi 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 Sumber Mas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sumber Mas Konstruksi has no effect on the direction of Wahana Inti i.e., Wahana Inti and Sumber Mas go up and down completely randomly.

Pair Corralation between Wahana Inti and Sumber Mas

Assuming the 90 days trading horizon Wahana Inti MakmurTbk is expected to generate 0.67 times more return on investment than Sumber Mas. However, Wahana Inti MakmurTbk is 1.49 times less risky than Sumber Mas. It trades about 0.04 of its potential returns per unit of risk. Sumber Mas Konstruksi is currently generating about -0.25 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 Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Wahana Inti MakmurTbk  vs.  Sumber Mas Konstruksi

Wahana Inti MakmurTbk

Risk-Adjusted Performance

0 of 100

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.

Sumber Mas Konstruksi

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sumber Mas Konstruksi has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak 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 Wahana Inti and Sumber Mas

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

The idea behind Wahana Inti MakmurTbk and Sumber Mas Konstruksi 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.