Correlation Between Indo Tambangraya and Wintermar Offshore

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

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

Diversification Opportunities for Indo Tambangraya and Wintermar Offshore

-0.57

Correlation Coefficient

Indo Tambangraya  Wintermar Offshore

Excellent diversification

The 3 months correlation between Indo and Wintermar is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Indo Tambangraya Megah 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 Indo Tambangraya 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 Indo Tambangraya Megah 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 Indo Tambangraya i.e., Indo Tambangraya and Wintermar Offshore go up and down completely randomly.

Pair Corralation between Indo Tambangraya and Wintermar Offshore

Assuming the 90 days trading horizon Indo Tambangraya is expected to generate 1.62 times less return on investment than Wintermar Offshore. But when comparing it to its historical volatility, Indo Tambangraya Megah is 2.37 times less risky than Wintermar Offshore. It trades about 0.05 of its potential returns per unit of risk. 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 Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Indo Tambangraya Megah  vs.  Wintermar Offshore Marine

Indo Tambangraya Megah

Risk-Adjusted Performance

0 of 100

Very Weak

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

The main advantage of trading using opposite Indo Tambangraya and Wintermar Offshore positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Indo Tambangraya 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 Indo Tambangraya Megah 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.