Correlation Between Sumber Mas and Wahana Inti

Can any of the company-specific risk be diversified away by investing in both Sumber Mas and Wahana Inti 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 Sumber Mas and Wahana Inti into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Sumber Mas Konstruksi and Wahana Inti MakmurTbk, you can compare the effects of market volatilities on Sumber Mas and Wahana Inti 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 Sumber Mas with a short position of Wahana Inti. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sumber Mas and Wahana Inti.

Diversification Opportunities for Sumber Mas and Wahana Inti

-0.02

Correlation Coefficient

Sumber Mas  Wahana Inti

Good diversification

The 3 months correlation between Sumber and Wahana is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Sumber Mas Konstruksi and Wahana Inti MakmurTbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wahana Inti MakmurTbk and Sumber Mas 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 Sumber Mas Konstruksi are associated (or correlated) with Wahana Inti. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wahana Inti MakmurTbk has no effect on the direction of Sumber Mas i.e., Sumber Mas and Wahana Inti go up and down completely randomly.

Pair Corralation between Sumber Mas and Wahana Inti

Assuming the 90 days trading horizon Sumber Mas Konstruksi is expected to generate 0.85 times more return on investment than Wahana Inti. However, Sumber Mas Konstruksi is 1.18 times less risky than Wahana Inti. It trades about -0.06 of its potential returns per unit of risk. Wahana Inti MakmurTbk is currently generating about -0.06 per unit of risk. If you would invest  8,600  in Sumber Mas Konstruksi on September 18, 2024 and sell it today you would lose (1,200) from holding Sumber Mas Konstruksi or give up 13.95% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Sumber Mas Konstruksi  vs.  Wahana Inti MakmurTbk

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 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 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.

Pair Trading with Sumber Mas and Wahana Inti

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

The idea behind Sumber Mas Konstruksi and Wahana Inti MakmurTbk 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.