Correlation Between PT Wintermar and Unilever Plc

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

Diversification Opportunities for PT Wintermar and Unilever Plc

0.05

Correlation Coefficient

PT Wintermar  Unilever Plc

Significant diversification

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

Pair Corralation between PT Wintermar and Unilever Plc

Assuming the 90 days horizon PT Wintermar Offshore is expected to under-perform the Unilever Plc. In addition to that, PT Wintermar is 7.61 times more volatile than Unilever Plc. It trades about -0.02 of its total potential returns per unit of risk. Unilever Plc is currently generating about 0.01 per unit of volatility. If you would invest  5,430  in Unilever Plc on December 23, 2024 and sell it today you would earn a total of  16.00  from holding Unilever Plc or generate 0.29% 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.  Unilever Plc

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.

Unilever Plc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Unilever Plc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental drivers, Unilever Plc is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with PT Wintermar and Unilever Plc

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

The idea behind PT Wintermar Offshore and Unilever 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.