Correlation Between Wilmar International and PT Wintermar

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

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

Diversification Opportunities for Wilmar International and PT Wintermar

-0.52

Correlation Coefficient

Wilmar International  PT Wintermar

Excellent diversification

The 3 months correlation between Wilmar and W6O is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Wilmar International Limited 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 Wilmar International 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 Wilmar International Limited 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 Wilmar International i.e., Wilmar International and PT Wintermar go up and down completely randomly.

Pair Corralation between Wilmar International and PT Wintermar

Assuming the 90 days trading horizon Wilmar International Limited is expected to generate 0.21 times more return on investment than PT Wintermar. However, Wilmar International Limited is 4.88 times less risky than PT Wintermar. It trades about 0.04 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  215.00  in Wilmar International Limited on December 20, 2024 and sell it today you would earn a total of  8.00  from holding Wilmar International Limited or generate 3.72% return on investment over 90 days.

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

Wilmar International Limited  vs.  PT Wintermar Offshore

Wilmar International

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Wilmar International Limited are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable technical indicators, Wilmar International 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

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 fragile 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 Wilmar International and PT Wintermar

The main advantage of trading using opposite Wilmar International and PT Wintermar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wilmar International 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 Wilmar International Limited 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.

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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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.