Correlation Between Pacific Basin and PT Wintermar

Can any of the company-specific risk be diversified away by investing in both Pacific Basin and PT Wintermar 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 Pacific Basin and PT Wintermar into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Pacific Basin Shipping and PT Wintermar Offshore, you can compare the effects of market volatilities on Pacific Basin and PT Wintermar 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 Pacific Basin with a short position of PT Wintermar. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pacific Basin and PT Wintermar.

Diversification Opportunities for Pacific Basin and PT Wintermar

0.54

Correlation Coefficient

Pacific Basin  PT Wintermar

Very weak diversification

The 3 months correlation between Pacific and W6O is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Pacific Basin Shipping and PT Wintermar Offshore in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PT Wintermar Offshore and Pacific Basin 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 Pacific Basin Shipping are associated (or correlated) with PT Wintermar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PT Wintermar Offshore has no effect on the direction of Pacific Basin i.e., Pacific Basin and PT Wintermar go up and down completely randomly.

Pair Corralation between Pacific Basin and PT Wintermar

Assuming the 90 days horizon Pacific Basin Shipping is expected to under-perform the PT Wintermar. But the stock apears to be less risky and, when comparing its historical volatility, Pacific Basin Shipping is 1.23 times less risky than PT Wintermar. The stock trades about -0.11 of its potential returns per unit of risk. The PT Wintermar Offshore is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  2.70  in PT Wintermar Offshore on September 26, 2024 and sell it today you would lose (0.20) from holding PT Wintermar Offshore or give up 7.41% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Pacific Basin Shipping  vs.  PT Wintermar Offshore

Pacific Basin Shipping

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pacific Basin Shipping has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

PT Wintermar Offshore

Risk-Adjusted Performance

0 of 100

Weak

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

Pair Trading with Pacific Basin and PT Wintermar

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

The idea behind Pacific Basin Shipping and PT Wintermar Offshore 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 Anywhere module to track or share privately all of your investments from the convenience of any device.