Correlation Between PT Charlie and Weha Transportasi

Can any of the company-specific risk be diversified away by investing in both PT Charlie and Weha Transportasi 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 PT Charlie and Weha Transportasi into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between PT Charlie Hospital and Weha Transportasi Indonesia, you can compare the effects of market volatilities on PT Charlie and Weha Transportasi 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 PT Charlie with a short position of Weha Transportasi. Check out your portfolio center. Please also check ongoing floating volatility patterns of PT Charlie and Weha Transportasi.

Diversification Opportunities for PT Charlie and Weha Transportasi

0.81

Correlation Coefficient

PT Charlie  Weha Transportasi

Very poor diversification

The 3 months correlation between RSCH and Weha is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding PT Charlie Hospital and Weha Transportasi Indonesia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Weha Transportasi and PT Charlie 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 PT Charlie Hospital are associated (or correlated) with Weha Transportasi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Weha Transportasi has no effect on the direction of PT Charlie i.e., PT Charlie and Weha Transportasi go up and down completely randomly.

Pair Corralation between PT Charlie and Weha Transportasi

Assuming the 90 days trading horizon PT Charlie Hospital is expected to generate 1.35 times more return on investment than Weha Transportasi. However, PT Charlie is 1.35 times more volatile than Weha Transportasi Indonesia. It trades about 0.02 of its potential returns per unit of risk. Weha Transportasi Indonesia is currently generating about 0.0 per unit of risk. If you would invest  32,600  in PT Charlie Hospital on September 5, 2024 and sell it today you would earn a total of  400.00  from holding PT Charlie Hospital or generate 1.23% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.41%
Values	Daily Returns

PT Charlie Hospital  vs.  Weha Transportasi Indonesia

PT Charlie Hospital

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in PT Charlie Hospital are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent forward-looking signals, PT Charlie is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Weha Transportasi

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with PT Charlie and Weha Transportasi

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

The idea behind PT Charlie Hospital and Weha Transportasi Indonesia 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..