Correlation Between Wir Asia and Champ Resto

Can any of the company-specific risk be diversified away by investing in both Wir Asia and Champ Resto 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 Wir Asia and Champ Resto into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Wir Asia Tbk and Champ Resto Indonesia, you can compare the effects of market volatilities on Wir Asia and Champ Resto 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 Wir Asia with a short position of Champ Resto. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wir Asia and Champ Resto.

Diversification Opportunities for Wir Asia and Champ Resto

-0.57

Correlation Coefficient

Wir Asia  Champ Resto

Excellent diversification

The 3 months correlation between Wir and Champ is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Wir Asia Tbk and Champ Resto Indonesia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Champ Resto Indonesia and Wir Asia 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 Wir Asia Tbk are associated (or correlated) with Champ Resto. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Champ Resto Indonesia has no effect on the direction of Wir Asia i.e., Wir Asia and Champ Resto go up and down completely randomly.

Pair Corralation between Wir Asia and Champ Resto

Assuming the 90 days trading horizon Wir Asia Tbk is expected to generate 1.24 times more return on investment than Champ Resto. However, Wir Asia is 1.24 times more volatile than Champ Resto Indonesia. It trades about 0.0 of its potential returns per unit of risk. Champ Resto Indonesia is currently generating about -0.06 per unit of risk. If you would invest  12,400  in Wir Asia Tbk on September 15, 2024 and sell it today you would lose (3,200) from holding Wir Asia Tbk or give up 25.81% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Wir Asia Tbk  vs.  Champ Resto Indonesia

Wir Asia Tbk

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Wir Asia Tbk are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Wir Asia may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Champ Resto Indonesia

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Champ Resto Indonesia 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 Wir Asia and Champ Resto

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

The idea behind Wir Asia Tbk and Champ Resto 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.