Correlation Between Wintermar Offshore and Pertamina Geothermal

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

Diversification Opportunities for Wintermar Offshore and Pertamina Geothermal

0.74

Correlation Coefficient

Wintermar Offshore  Pertamina Geothermal

Poor diversification

The 3 months correlation between Wintermar and Pertamina is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Wintermar Offshore Marine and Pertamina Geothermal Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pertamina Geothermal 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 Pertamina Geothermal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pertamina Geothermal has no effect on the direction of Wintermar Offshore i.e., Wintermar Offshore and Pertamina Geothermal go up and down completely randomly.

Pair Corralation between Wintermar Offshore and Pertamina Geothermal

Assuming the 90 days trading horizon Wintermar Offshore Marine is expected to under-perform the Pertamina Geothermal. In addition to that, Wintermar Offshore is 1.09 times more volatile than Pertamina Geothermal Energy. It trades about -0.22 of its total potential returns per unit of risk. Pertamina Geothermal Energy is currently generating about -0.15 per unit of volatility. If you would invest  101,500  in Pertamina Geothermal Energy on October 11, 2024 and sell it today you would lose (11,500) from holding Pertamina Geothermal Energy or give up 11.33% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	97.44%
Values	Daily Returns

Wintermar Offshore Marine  vs.  Pertamina Geothermal Energy

Wintermar Offshore Marine

Risk-Adjusted Performance

0 of 100

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 conflicting performance in the last few months, the Stock's forward-looking signals remain quite persistent which may send shares a bit higher in February 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pertamina Geothermal

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pertamina Geothermal Energy has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's forward-looking signals remain quite persistent which may send shares a bit higher in February 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Wintermar Offshore and Pertamina Geothermal

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

The idea behind Wintermar Offshore Marine and Pertamina Geothermal Energy 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.