Correlation Between PT Wintermar and FirstGroup Plc

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

Diversification Opportunities for PT Wintermar and FirstGroup Plc

-0.56

Correlation Coefficient

PT Wintermar  FirstGroup Plc

Excellent diversification

The 3 months correlation between W6O and FirstGroup is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding PT Wintermar Offshore and FirstGroup plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FirstGroup plc 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 FirstGroup Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FirstGroup plc has no effect on the direction of PT Wintermar i.e., PT Wintermar and FirstGroup Plc go up and down completely randomly.

Pair Corralation between PT Wintermar and FirstGroup Plc

Assuming the 90 days horizon PT Wintermar Offshore is expected to generate 6.32 times more return on investment than FirstGroup Plc. However, PT Wintermar is 6.32 times more volatile than FirstGroup plc. It trades about 0.06 of its potential returns per unit of risk. FirstGroup plc is currently generating about 0.01 per unit of risk. If you would invest  1.85  in PT Wintermar Offshore on October 9, 2024 and sell it today you would earn a total of  0.65  from holding PT Wintermar Offshore or generate 35.14% return on investment over 90 days.

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

PT Wintermar Offshore  vs.  FirstGroup plc

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 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.

FirstGroup plc

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in FirstGroup plc are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, FirstGroup Plc reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with PT Wintermar and FirstGroup Plc

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

The idea behind PT Wintermar Offshore and FirstGroup plc 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.