Correlation Between PT Wintermar and Eastman Chemical

Can any of the company-specific risk be diversified away by investing in both PT Wintermar and Eastman Chemical 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 Eastman Chemical 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 Eastman Chemical, you can compare the effects of market volatilities on PT Wintermar and Eastman Chemical 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 Eastman Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of PT Wintermar and Eastman Chemical.

Diversification Opportunities for PT Wintermar and Eastman Chemical

-0.05

Correlation Coefficient

PT Wintermar  Eastman Chemical

Good diversification

The 3 months correlation between W6O and Eastman is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding PT Wintermar Offshore and Eastman Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eastman Chemical 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 Eastman Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eastman Chemical has no effect on the direction of PT Wintermar i.e., PT Wintermar and Eastman Chemical go up and down completely randomly.

Pair Corralation between PT Wintermar and Eastman Chemical

Assuming the 90 days horizon PT Wintermar Offshore is expected to under-perform the Eastman Chemical. In addition to that, PT Wintermar is 6.57 times more volatile than Eastman Chemical. It trades about -0.02 of its total potential returns per unit of risk. Eastman Chemical is currently generating about -0.02 per unit of volatility. If you would invest  8,557  in Eastman Chemical on December 20, 2024 and sell it today you would lose (233.00) from holding Eastman Chemical or give up 2.72% of portfolio value over 90 days.

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

PT Wintermar Offshore  vs.  Eastman Chemical

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.

Eastman Chemical

Risk-Adjusted Performance

Very Weak

Over the last 90 days Eastman Chemical has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Eastman Chemical is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with PT Wintermar and Eastman Chemical

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

The idea behind PT Wintermar Offshore and Eastman Chemical 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.