Correlation Between PT Wintermar and CHINA BANK

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

By analyzing existing cross correlation between PT Wintermar Offshore and CHINA BANK ADR20, you can compare the effects of market volatilities on PT Wintermar and CHINA BANK 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 PT Wintermar with a short position of CHINA BANK. Check out your portfolio center. Please also check ongoing floating volatility patterns of PT Wintermar and CHINA BANK.

Diversification Opportunities for PT Wintermar and CHINA BANK

0.06

Correlation Coefficient

PT Wintermar  CHINA BANK

Significant diversification

The 3 months correlation between W6O and CHINA is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding PT Wintermar Offshore and CHINA BANK ADR20 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CHINA BANK ADR20 and PT Wintermar 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 PT Wintermar Offshore are associated (or correlated) with CHINA BANK. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CHINA BANK ADR20 has no effect on the direction of PT Wintermar i.e., PT Wintermar and CHINA BANK go up and down completely randomly.

Pair Corralation between PT Wintermar and CHINA BANK

Assuming the 90 days horizon PT Wintermar Offshore is expected to generate 2.65 times more return on investment than CHINA BANK. However, PT Wintermar is 2.65 times more volatile than CHINA BANK ADR20. It trades about 0.05 of its potential returns per unit of risk. CHINA BANK ADR20 is currently generating about 0.09 per unit of risk. If you would invest  2.20  in PT Wintermar Offshore on October 8, 2024 and sell it today you would earn a total of  0.30  from holding PT Wintermar Offshore or generate 13.64% return on investment over 90 days.

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

PT Wintermar Offshore  vs.  CHINA BANK ADR20

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 unsteady 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.

CHINA BANK ADR20

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in CHINA BANK ADR20 are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, CHINA BANK reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with PT Wintermar and CHINA BANK

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

The idea behind PT Wintermar Offshore and CHINA BANK ADR20 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.