Correlation Between PT Indo and WIZZ AIR

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

By analyzing existing cross correlation between PT Indo Tambangraya and WIZZ AIR HLDGUNSPADR4, you can compare the effects of market volatilities on PT Indo and WIZZ AIR 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 Indo with a short position of WIZZ AIR. Check out your portfolio center. Please also check ongoing floating volatility patterns of PT Indo and WIZZ AIR.

Diversification Opportunities for PT Indo and WIZZ AIR

-0.55

Correlation Coefficient

PT Indo  WIZZ AIR

Excellent diversification

The 3 months correlation between 3IB and WIZZ is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding PT Indo Tambangraya and WIZZ AIR HLDGUNSPADR4 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WIZZ AIR HLDGUNSPADR4 and PT Indo 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 Indo Tambangraya are associated (or correlated) with WIZZ AIR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WIZZ AIR HLDGUNSPADR4 has no effect on the direction of PT Indo i.e., PT Indo and WIZZ AIR go up and down completely randomly.

Pair Corralation between PT Indo and WIZZ AIR

Assuming the 90 days trading horizon PT Indo Tambangraya is expected to under-perform the WIZZ AIR. But the stock apears to be less risky and, when comparing its historical volatility, PT Indo Tambangraya is 1.91 times less risky than WIZZ AIR. The stock trades about -0.13 of its potential returns per unit of risk. The WIZZ AIR HLDGUNSPADR4 is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  440.00  in WIZZ AIR HLDGUNSPADR4 on December 19, 2024 and sell it today you would earn a total of  46.00  from holding WIZZ AIR HLDGUNSPADR4 or generate 10.45% return on investment over 90 days.

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

PT Indo Tambangraya  vs.  WIZZ AIR HLDGUNSPADR4

PT Indo Tambangraya

Risk-Adjusted Performance

Very Weak

Over the last 90 days PT Indo Tambangraya has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

WIZZ AIR HLDGUNSPADR4

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in WIZZ AIR HLDGUNSPADR4 are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, WIZZ AIR reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with PT Indo and WIZZ AIR

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

The idea behind PT Indo Tambangraya and WIZZ AIR HLDGUNSPADR4 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.