Correlation Between PT Bank and CMS Energy

Can any of the company-specific risk be diversified away by investing in both PT Bank and CMS Energy 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 CMS Energy 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 CMS Energy, you can compare the effects of market volatilities on PT Bank and CMS Energy 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 CMS Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of PT Bank and CMS Energy.

Diversification Opportunities for PT Bank and CMS Energy

0.16

Correlation Coefficient

PT Bank  CMS Energy

Average diversification

The 3 months correlation between BYRA and CMS is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding PT Bank Rakyat and CMS Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CMS Energy 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 CMS Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CMS Energy has no effect on the direction of PT Bank i.e., PT Bank and CMS Energy go up and down completely randomly.

Pair Corralation between PT Bank and CMS Energy

Assuming the 90 days trading horizon PT Bank Rakyat is expected to under-perform the CMS Energy. In addition to that, PT Bank is 6.21 times more volatile than CMS Energy. It trades about -0.01 of its total potential returns per unit of risk. CMS Energy is currently generating about 0.02 per unit of volatility. If you would invest  6,297  in CMS Energy on May 5, 2025 and sell it today you would earn a total of  53.00  from holding CMS Energy or generate 0.84% return on investment over 90 days.

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

PT Bank Rakyat  vs.  CMS Energy

PT Bank Rakyat

Risk-Adjusted Performance

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 basic indicators, PT Bank is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

CMS Energy

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in CMS Energy are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable technical and fundamental indicators, CMS Energy is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with PT Bank and CMS Energy

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

The idea behind PT Bank Rakyat and CMS Energy 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.