Correlation Between PACCAR and PT Wintermar
Can any of the company-specific risk be diversified away by investing in both PACCAR 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 PACCAR and PT Wintermar into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PACCAR Inc and PT Wintermar Offshore, you can compare the effects of market volatilities on PACCAR 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 PACCAR with a short position of PT Wintermar. Check out your portfolio center. Please also check ongoing floating volatility patterns of PACCAR and PT Wintermar.
Diversification Opportunities for PACCAR and PT Wintermar
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between PACCAR and W6O is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding PACCAR Inc 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 PACCAR 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 PACCAR Inc 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 PACCAR i.e., PACCAR and PT Wintermar go up and down completely randomly.
Pair Corralation between PACCAR and PT Wintermar
Assuming the 90 days horizon PACCAR Inc is expected to generate 0.49 times more return on investment than PT Wintermar. However, PACCAR Inc is 2.04 times less risky than PT Wintermar. It trades about 0.11 of its potential returns per unit of risk. PT Wintermar Offshore is currently generating about -0.02 per unit of risk. If you would invest 9,362 in PACCAR Inc on October 25, 2024 and sell it today you would earn a total of 1,192 from holding PACCAR Inc or generate 12.73% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 98.33% |
Values | Daily Returns |
PACCAR Inc vs. PT Wintermar Offshore
Performance |
Timeline |
PACCAR Inc |
PT Wintermar Offshore |
PACCAR and PT Wintermar Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with PACCAR and PT Wintermar
The main advantage of trading using opposite PACCAR and PT Wintermar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PACCAR 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.PACCAR vs. Universal Entertainment | ||
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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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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