Correlation Between Widodo Makmur and Dayamitra Telekomunikasi

Can any of the company-specific risk be diversified away by investing in both Widodo Makmur and Dayamitra Telekomunikasi 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 Widodo Makmur and Dayamitra Telekomunikasi into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Widodo Makmur Unggas and Dayamitra Telekomunikasi PT, you can compare the effects of market volatilities on Widodo Makmur and Dayamitra Telekomunikasi 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 Widodo Makmur with a short position of Dayamitra Telekomunikasi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Widodo Makmur and Dayamitra Telekomunikasi.

Diversification Opportunities for Widodo Makmur and Dayamitra Telekomunikasi

0.38

Correlation Coefficient

Widodo Makmur  Dayamitra Telekomunikasi

Weak diversification

The 3 months correlation between Widodo and Dayamitra is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Widodo Makmur Unggas and Dayamitra Telekomunikasi PT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dayamitra Telekomunikasi and Widodo Makmur 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 Widodo Makmur Unggas are associated (or correlated) with Dayamitra Telekomunikasi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dayamitra Telekomunikasi has no effect on the direction of Widodo Makmur i.e., Widodo Makmur and Dayamitra Telekomunikasi go up and down completely randomly.

Pair Corralation between Widodo Makmur and Dayamitra Telekomunikasi

Assuming the 90 days trading horizon Widodo Makmur Unggas is expected to under-perform the Dayamitra Telekomunikasi. In addition to that, Widodo Makmur is 2.91 times more volatile than Dayamitra Telekomunikasi PT. It trades about -0.03 of its total potential returns per unit of risk. Dayamitra Telekomunikasi PT is currently generating about 0.03 per unit of volatility. If you would invest  65,500  in Dayamitra Telekomunikasi PT on September 20, 2024 and sell it today you would earn a total of  1,500  from holding Dayamitra Telekomunikasi PT or generate 2.29% return on investment over 90 days.

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

Widodo Makmur Unggas  vs.  Dayamitra Telekomunikasi PT

Widodo Makmur Unggas

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Widodo Makmur Unggas 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.

Dayamitra Telekomunikasi

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Dayamitra Telekomunikasi PT are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent forward-looking signals, Dayamitra Telekomunikasi 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 Widodo Makmur and Dayamitra Telekomunikasi

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

The idea behind Widodo Makmur Unggas and Dayamitra Telekomunikasi PT 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..