Correlation Between Wintermar Offshore and Arwana Citramulia

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Can any of the company-specific risk be diversified away by investing in both Wintermar Offshore and Arwana Citramulia 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 Wintermar Offshore and Arwana Citramulia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wintermar Offshore Marine and Arwana Citramulia Tbk, you can compare the effects of market volatilities on Wintermar Offshore and Arwana Citramulia 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 Wintermar Offshore with a short position of Arwana Citramulia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wintermar Offshore and Arwana Citramulia.

Diversification Opportunities for Wintermar Offshore and Arwana Citramulia

0.53
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Wintermar and Arwana is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Wintermar Offshore Marine and Arwana Citramulia Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arwana Citramulia Tbk and Wintermar Offshore 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 Wintermar Offshore Marine are associated (or correlated) with Arwana Citramulia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arwana Citramulia Tbk has no effect on the direction of Wintermar Offshore i.e., Wintermar Offshore and Arwana Citramulia go up and down completely randomly.

Pair Corralation between Wintermar Offshore and Arwana Citramulia

Assuming the 90 days trading horizon Wintermar Offshore Marine is expected to generate 2.39 times more return on investment than Arwana Citramulia. However, Wintermar Offshore is 2.39 times more volatile than Arwana Citramulia Tbk. It trades about 0.05 of its potential returns per unit of risk. Arwana Citramulia Tbk is currently generating about -0.03 per unit of risk. If you would invest  27,749  in Wintermar Offshore Marine on September 27, 2024 and sell it today you would earn a total of  16,851  from holding Wintermar Offshore Marine or generate 60.73% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy99.79%
ValuesDaily Returns

Wintermar Offshore Marine  vs.  Arwana Citramulia Tbk

 Performance 
       Timeline  
Wintermar Offshore Marine 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Wintermar Offshore Marine has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Wintermar Offshore is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.
Arwana Citramulia Tbk 

Risk-Adjusted Performance

2 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Arwana Citramulia Tbk are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent forward-looking signals, Arwana Citramulia is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Wintermar Offshore and Arwana Citramulia Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Wintermar Offshore and Arwana Citramulia

The main advantage of trading using opposite Wintermar Offshore and Arwana Citramulia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wintermar Offshore position performs unexpectedly, Arwana Citramulia 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 Arwana Citramulia will offset losses from the drop in Arwana Citramulia's long position.
The idea behind Wintermar Offshore Marine and Arwana Citramulia Tbk 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.

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