Correlation Between PT Wintermar and Chongqing Machinery
Can any of the company-specific risk be diversified away by investing in both PT Wintermar and Chongqing Machinery 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 Chongqing Machinery 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 Chongqing Machinery Electric, you can compare the effects of market volatilities on PT Wintermar and Chongqing Machinery 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 Chongqing Machinery. Check out your portfolio center. Please also check ongoing floating volatility patterns of PT Wintermar and Chongqing Machinery.
Diversification Opportunities for PT Wintermar and Chongqing Machinery
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between W6O and Chongqing is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding PT Wintermar Offshore and Chongqing Machinery Electric in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chongqing Machinery 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 Chongqing Machinery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chongqing Machinery has no effect on the direction of PT Wintermar i.e., PT Wintermar and Chongqing Machinery go up and down completely randomly.
Pair Corralation between PT Wintermar and Chongqing Machinery
Assuming the 90 days horizon PT Wintermar Offshore is expected to generate 1.62 times more return on investment than Chongqing Machinery. However, PT Wintermar is 1.62 times more volatile than Chongqing Machinery Electric. It trades about 0.05 of its potential returns per unit of risk. Chongqing Machinery Electric is currently generating about 0.06 per unit of risk. If you would invest 1.25 in PT Wintermar Offshore on October 11, 2024 and sell it today you would earn a total of 0.90 from holding PT Wintermar Offshore or generate 72.0% 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. Chongqing Machinery Electric
Performance |
| Timeline |
| PT Wintermar Offshore |
| Chongqing Machinery |
PT Wintermar and Chongqing Machinery Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PT Wintermar and Chongqing Machinery
The main advantage of trading using opposite PT Wintermar and Chongqing Machinery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PT Wintermar position performs unexpectedly, Chongqing Machinery 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 Chongqing Machinery will offset losses from the drop in Chongqing Machinery's long position.| PT Wintermar vs. PPHE HOTEL GROUP | PT Wintermar vs. CarsalesCom | PT Wintermar vs. MHP Hotel AG | PT Wintermar vs. CITY OFFICE REIT |
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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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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