Correlation Between WIMFARM SA and PT Indosat

Can any of the company-specific risk be diversified away by investing in both WIMFARM SA and PT Indosat 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 Indosat 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 Indosat Tbk, you can compare the effects of market volatilities on WIMFARM SA and PT Indosat 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 Indosat. Check out your portfolio center. Please also check ongoing floating volatility patterns of WIMFARM SA and PT Indosat.

Diversification Opportunities for WIMFARM SA and PT Indosat

-0.14

Correlation Coefficient

WIMFARM SA  PT Indosat

Good diversification

The 3 months correlation between WIMFARM and IDO1 is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding WIMFARM SA EO and PT Indosat Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PT Indosat Tbk 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 Indosat. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PT Indosat Tbk has no effect on the direction of WIMFARM SA i.e., WIMFARM SA and PT Indosat go up and down completely randomly.

Pair Corralation between WIMFARM SA and PT Indosat

Assuming the 90 days horizon WIMFARM SA is expected to generate 2.56 times less return on investment than PT Indosat. But when comparing it to its historical volatility, WIMFARM SA EO is 3.88 times less risky than PT Indosat. It trades about 0.03 of its potential returns per unit of risk. PT Indosat Tbk is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  16.00  in PT Indosat Tbk on December 28, 2024 and sell it today you would lose (9.40) from holding PT Indosat Tbk or give up 58.75% of portfolio value over 90 days.

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

WIMFARM SA EO  vs.  PT Indosat Tbk

WIMFARM SA EO

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in WIMFARM SA EO are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, WIMFARM SA may actually be approaching a critical reversion point that can send shares even higher in April 2025.

PT Indosat Tbk

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in PT Indosat Tbk are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, PT Indosat reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with WIMFARM SA and PT Indosat

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

The idea behind WIMFARM SA EO and PT Indosat Tbk 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.