Correlation Between WIMFARM SA and PT Bank

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

By analyzing existing cross correlation between WIMFARM SA EO and PT Bank Rakyat, you can compare the effects of market volatilities on WIMFARM SA and PT Bank 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 WIMFARM SA with a short position of PT Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of WIMFARM SA and PT Bank.

Diversification Opportunities for WIMFARM SA and PT Bank

0.69

Correlation Coefficient

WIMFARM SA  PT Bank

Poor diversification

The 3 months correlation between WIMFARM and BYRA is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding WIMFARM SA EO and PT Bank Rakyat in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PT Bank Rakyat and WIMFARM SA 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 WIMFARM SA EO are associated (or correlated) with PT Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PT Bank Rakyat has no effect on the direction of WIMFARM SA i.e., WIMFARM SA and PT Bank go up and down completely randomly.

Pair Corralation between WIMFARM SA and PT Bank

Assuming the 90 days horizon WIMFARM SA EO is expected to generate 1.05 times more return on investment than PT Bank. However, WIMFARM SA is 1.05 times more volatile than PT Bank Rakyat. It trades about 0.04 of its potential returns per unit of risk. PT Bank Rakyat is currently generating about -0.02 per unit of risk. If you would invest  311.00  in WIMFARM SA EO on September 3, 2024 and sell it today you would earn a total of  15.00  from holding WIMFARM SA EO or generate 4.82% return on investment over 90 days.

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

WIMFARM SA EO  vs.  PT Bank Rakyat

WIMFARM SA EO

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in WIMFARM SA EO are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, WIMFARM SA may actually be approaching a critical reversion point that can send shares even higher in January 2025.

PT Bank Rakyat

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PT Bank Rakyat has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, PT Bank is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with WIMFARM SA and PT Bank

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

The idea behind WIMFARM SA EO and PT Bank Rakyat 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.