Correlation Between AP Mller and PT Wintermar

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

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

Diversification Opportunities for AP Mller and PT Wintermar

-0.11

Correlation Coefficient

AP Mller  PT Wintermar

Good diversification

The 3 months correlation between DP4A and W6O is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding AP Mller and PT Wintermar Offshore in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PT Wintermar Offshore and AP Mller 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 AP Mller are associated (or correlated) with PT Wintermar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PT Wintermar Offshore has no effect on the direction of AP Mller i.e., AP Mller and PT Wintermar go up and down completely randomly.

Pair Corralation between AP Mller and PT Wintermar

Assuming the 90 days trading horizon AP Mller is expected to under-perform the PT Wintermar. But the stock apears to be less risky and, when comparing its historical volatility, AP Mller is 2.01 times less risky than PT Wintermar. The stock trades about -0.25 of its potential returns per unit of risk. The PT Wintermar Offshore is currently generating about -0.11 of returns per unit of risk over similar time horizon. If you would invest  2.50  in PT Wintermar Offshore on October 24, 2024 and sell it today you would lose (0.25) from holding PT Wintermar Offshore or give up 10.0% of portfolio value over 90 days.

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

AP Mller   vs.  PT Wintermar Offshore

AP Mller

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in AP Mller are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, AP Mller is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

PT Wintermar Offshore

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PT Wintermar Offshore has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with AP Mller and PT Wintermar

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

The idea behind AP Mller and PT Wintermar Offshore 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.

Check out your portfolio center.

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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.