Correlation Between Aneka Tambang and Wintermar Offshore

Can any of the company-specific risk be diversified away by investing in both Aneka Tambang and Wintermar Offshore 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 Aneka Tambang and Wintermar Offshore into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Aneka Tambang Persero and Wintermar Offshore Marine, you can compare the effects of market volatilities on Aneka Tambang and Wintermar Offshore 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 Aneka Tambang with a short position of Wintermar Offshore. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aneka Tambang and Wintermar Offshore.

Diversification Opportunities for Aneka Tambang and Wintermar Offshore

0.62

Correlation Coefficient

Aneka Tambang  Wintermar Offshore

Poor diversification

The 3 months correlation between Aneka and Wintermar is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Aneka Tambang Persero and Wintermar Offshore Marine in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wintermar Offshore Marine and Aneka Tambang 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 Aneka Tambang Persero are associated (or correlated) with Wintermar Offshore. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wintermar Offshore Marine has no effect on the direction of Aneka Tambang i.e., Aneka Tambang and Wintermar Offshore go up and down completely randomly.

Pair Corralation between Aneka Tambang and Wintermar Offshore

Assuming the 90 days trading horizon Aneka Tambang Persero is expected to under-perform the Wintermar Offshore. But the stock apears to be less risky and, when comparing its historical volatility, Aneka Tambang Persero is 1.33 times less risky than Wintermar Offshore. The stock trades about -0.02 of its potential returns per unit of risk. The Wintermar Offshore Marine is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  38,573  in Wintermar Offshore Marine on September 28, 2024 and sell it today you would earn a total of  6,027  from holding Wintermar Offshore Marine or generate 15.62% return on investment over 90 days.

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

Aneka Tambang Persero  vs.  Wintermar Offshore Marine

Aneka Tambang Persero

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aneka Tambang Persero has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Aneka Tambang is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Wintermar Offshore Marine

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Wintermar Offshore Marine has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Wintermar Offshore 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 Aneka Tambang and Wintermar Offshore

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

The idea behind Aneka Tambang Persero and Wintermar Offshore Marine 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.