Correlation Between Wijaya Karya and Bukaka Teknik

Can any of the company-specific risk be diversified away by investing in both Wijaya Karya and Bukaka Teknik 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 Wijaya Karya and Bukaka Teknik into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Wijaya Karya Bangunan and Bukaka Teknik Utama, you can compare the effects of market volatilities on Wijaya Karya and Bukaka Teknik 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 Wijaya Karya with a short position of Bukaka Teknik. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wijaya Karya and Bukaka Teknik.

Diversification Opportunities for Wijaya Karya and Bukaka Teknik

0.86

Correlation Coefficient

Wijaya Karya  Bukaka Teknik

Very poor diversification

The 3 months correlation between Wijaya and Bukaka is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Wijaya Karya Bangunan and Bukaka Teknik Utama in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bukaka Teknik Utama and Wijaya Karya 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 Wijaya Karya Bangunan are associated (or correlated) with Bukaka Teknik. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bukaka Teknik Utama has no effect on the direction of Wijaya Karya i.e., Wijaya Karya and Bukaka Teknik go up and down completely randomly.

Pair Corralation between Wijaya Karya and Bukaka Teknik

Assuming the 90 days trading horizon Wijaya Karya Bangunan is expected to under-perform the Bukaka Teknik. In addition to that, Wijaya Karya is 1.41 times more volatile than Bukaka Teknik Utama. It trades about -0.19 of its total potential returns per unit of risk. Bukaka Teknik Utama is currently generating about -0.11 per unit of volatility. If you would invest  98,500  in Bukaka Teknik Utama on September 18, 2024 and sell it today you would lose (8,500) from holding Bukaka Teknik Utama or give up 8.63% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

Wijaya Karya Bangunan  vs.  Bukaka Teknik Utama

Wijaya Karya Bangunan

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Wijaya Karya Bangunan 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.

Bukaka Teknik Utama

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bukaka Teknik Utama 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 Wijaya Karya and Bukaka Teknik

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

The idea behind Wijaya Karya Bangunan and Bukaka Teknik Utama 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.