Correlation Between Walgreens Boots and PT Indosat

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

By analyzing existing cross correlation between Walgreens Boots Alliance and PT Indosat Tbk, you can compare the effects of market volatilities on Walgreens Boots and PT Indosat 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 Walgreens Boots with a short position of PT Indosat. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walgreens Boots and PT Indosat.

Diversification Opportunities for Walgreens Boots and PT Indosat

-0.29

Correlation Coefficient

Walgreens Boots  PT Indosat

Very good diversification

The 3 months correlation between Walgreens and IDO1 is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Walgreens Boots Alliance and PT Indosat Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PT Indosat Tbk and Walgreens Boots 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 Walgreens Boots Alliance are associated (or correlated) with PT Indosat. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PT Indosat Tbk has no effect on the direction of Walgreens Boots i.e., Walgreens Boots and PT Indosat go up and down completely randomly.

Pair Corralation between Walgreens Boots and PT Indosat

Considering the 90-day investment horizon Walgreens Boots Alliance is expected to under-perform the PT Indosat. But the stock apears to be less risky and, when comparing its historical volatility, Walgreens Boots Alliance is 1.97 times less risky than PT Indosat. The stock trades about -0.07 of its potential returns per unit of risk. The PT Indosat Tbk is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  36.00  in PT Indosat Tbk on September 20, 2024 and sell it today you would lose (23.00) from holding PT Indosat Tbk or give up 63.89% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.22%
Values	Daily Returns

Walgreens Boots Alliance  vs.  PT Indosat Tbk

Walgreens Boots Alliance

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Walgreens Boots Alliance are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain fundamental drivers, Walgreens Boots sustained solid returns over the last few months and may actually be approaching a breakup point.

PT Indosat Tbk

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Walgreens Boots and PT Indosat

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

The idea behind Walgreens Boots Alliance and PT Indosat 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.