Correlation Between PT Wintermar and Solstad Offshore

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

Diversification Opportunities for PT Wintermar and Solstad Offshore

-0.59

Correlation Coefficient

PT Wintermar  Solstad Offshore

Excellent diversification

The 3 months correlation between W6O and Solstad is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding PT Wintermar Offshore and Solstad Offshore ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Solstad Offshore ASA 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 Solstad Offshore. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Solstad Offshore ASA has no effect on the direction of PT Wintermar i.e., PT Wintermar and Solstad Offshore go up and down completely randomly.

Pair Corralation between PT Wintermar and Solstad Offshore

Assuming the 90 days horizon PT Wintermar Offshore is expected to under-perform the Solstad Offshore. In addition to that, PT Wintermar is 1.04 times more volatile than Solstad Offshore ASA. It trades about -0.02 of its total potential returns per unit of risk. Solstad Offshore ASA is currently generating about 0.13 per unit of volatility. If you would invest  260.00  in Solstad Offshore ASA on October 25, 2024 and sell it today you would earn a total of  79.00  from holding Solstad Offshore ASA or generate 30.38% 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.  Solstad Offshore ASA

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 nearly stable basic indicators, PT Wintermar is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Solstad Offshore ASA

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Solstad Offshore ASA are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Solstad Offshore unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with PT Wintermar and Solstad Offshore

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

The idea behind PT Wintermar Offshore and Solstad Offshore ASA 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.

Check out your portfolio center.

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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.