Correlation Between PT Bank and Buscar

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

By analyzing existing cross correlation between PT Bank Rakyat and Buscar Co, you can compare the effects of market volatilities on PT Bank and Buscar 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 Bank with a short position of Buscar. Check out your portfolio center. Please also check ongoing floating volatility patterns of PT Bank and Buscar.

Diversification Opportunities for PT Bank and Buscar

-0.56

Correlation Coefficient

PT Bank  Buscar

Excellent diversification

The 3 months correlation between BKRKF and Buscar is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding PT Bank Rakyat and Buscar Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Buscar and PT Bank 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 Bank Rakyat are associated (or correlated) with Buscar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Buscar has no effect on the direction of PT Bank i.e., PT Bank and Buscar go up and down completely randomly.

Pair Corralation between PT Bank and Buscar

Assuming the 90 days horizon PT Bank is expected to generate 107.23 times less return on investment than Buscar. But when comparing it to its historical volatility, PT Bank Rakyat is 2.46 times less risky than Buscar. It trades about 0.0 of its potential returns per unit of risk. Buscar Co is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  0.35  in Buscar Co on August 20, 2024 and sell it today you would earn a total of  0.02  from holding Buscar Co or generate 5.71% return on investment over 90 days.

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

PT Bank Rakyat  vs.  Buscar Co

PT Bank Rakyat

Risk-Adjusted Performance

0 of 100

Very Weak

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

Buscar

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Buscar Co are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain essential indicators, Buscar exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with PT Bank and Buscar

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

The idea behind PT Bank Rakyat and Buscar Co 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.