Correlation Between Golden Eagle and Wilton Makmur

Can any of the company-specific risk be diversified away by investing in both Golden Eagle and Wilton Makmur 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 Golden Eagle and Wilton Makmur into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Golden Eagle Energy and Wilton Makmur Indonesia, you can compare the effects of market volatilities on Golden Eagle and Wilton Makmur 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 Golden Eagle with a short position of Wilton Makmur. Check out your portfolio center. Please also check ongoing floating volatility patterns of Golden Eagle and Wilton Makmur.

Diversification Opportunities for Golden Eagle and Wilton Makmur

-0.58

Correlation Coefficient

Golden Eagle  Wilton Makmur

Excellent diversification

The 3 months correlation between Golden and Wilton is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Golden Eagle Energy and Wilton Makmur Indonesia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wilton Makmur Indonesia and Golden Eagle 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 Golden Eagle Energy are associated (or correlated) with Wilton Makmur. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wilton Makmur Indonesia has no effect on the direction of Golden Eagle i.e., Golden Eagle and Wilton Makmur go up and down completely randomly.

Pair Corralation between Golden Eagle and Wilton Makmur

Assuming the 90 days trading horizon Golden Eagle Energy is expected to generate 0.18 times more return on investment than Wilton Makmur. However, Golden Eagle Energy is 5.6 times less risky than Wilton Makmur. It trades about 0.24 of its potential returns per unit of risk. Wilton Makmur Indonesia is currently generating about -0.1 per unit of risk. If you would invest  73,000  in Golden Eagle Energy on December 30, 2024 and sell it today you would earn a total of  8,500  from holding Golden Eagle Energy or generate 11.64% return on investment over 90 days.

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

Golden Eagle Energy  vs.  Wilton Makmur Indonesia

Golden Eagle Energy

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Golden Eagle Energy are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Golden Eagle may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Wilton Makmur Indonesia

Risk-Adjusted Performance

Very Weak

Over the last 90 days Wilton Makmur Indonesia has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's forward-looking signals remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Golden Eagle and Wilton Makmur

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

The idea behind Golden Eagle Energy and Wilton Makmur Indonesia 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.