Correlation Between W P and INDO RAMA

Can any of the company-specific risk be diversified away by investing in both W P and INDO RAMA 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 W P and INDO RAMA into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between W P Carey and INDO RAMA SYNTHETIC, you can compare the effects of market volatilities on W P and INDO RAMA 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 W P with a short position of INDO RAMA. Check out your portfolio center. Please also check ongoing floating volatility patterns of W P and INDO RAMA.

Diversification Opportunities for W P and INDO RAMA

0.0

Correlation Coefficient

W P  INDO RAMA

Pay attention - limited upside

The 3 months correlation between WPY and INDO is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding W P Carey and INDO RAMA SYNTHETIC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on INDO RAMA SYNTHETIC and W P 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 W P Carey are associated (or correlated) with INDO RAMA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of INDO RAMA SYNTHETIC has no effect on the direction of W P i.e., W P and INDO RAMA go up and down completely randomly.

Pair Corralation between W P and INDO RAMA

Assuming the 90 days horizon W P Carey is expected to generate 0.43 times more return on investment than INDO RAMA. However, W P Carey is 2.31 times less risky than INDO RAMA. It trades about -0.03 of its potential returns per unit of risk. INDO RAMA SYNTHETIC is currently generating about -0.02 per unit of risk. If you would invest  6,624  in W P Carey on October 4, 2024 and sell it today you would lose (1,376) from holding W P Carey or give up 20.77% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

W P Carey  vs.  INDO RAMA SYNTHETIC

W P Carey

Risk-Adjusted Performance

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Very Weak

Over the last 90 days W P Carey has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, W P is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

INDO RAMA SYNTHETIC

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with W P and INDO RAMA

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

The idea behind W P Carey and INDO RAMA SYNTHETIC 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.