Correlation Between PT Bank and ÜSTRA Hannoversche

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

By analyzing existing cross correlation between PT Bank CIMB and STRA Hannoversche Verkehrsbetriebe, you can compare the effects of market volatilities on PT Bank and ÜSTRA Hannoversche 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 ÜSTRA Hannoversche. Check out your portfolio center. Please also check ongoing floating volatility patterns of PT Bank and ÜSTRA Hannoversche.

Diversification Opportunities for PT Bank and ÜSTRA Hannoversche

-0.24

Correlation Coefficient

PT Bank  ÜSTRA Hannoversche

Very good diversification

The 3 months correlation between NKX and ÜSTRA is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding PT Bank CIMB and STRA Hannoversche Verkehrsbetr in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ÜSTRA Hannoversche 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 CIMB are associated (or correlated) with ÜSTRA Hannoversche. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ÜSTRA Hannoversche has no effect on the direction of PT Bank i.e., PT Bank and ÜSTRA Hannoversche go up and down completely randomly.

Pair Corralation between PT Bank and ÜSTRA Hannoversche

Assuming the 90 days trading horizon PT Bank CIMB is expected to under-perform the ÜSTRA Hannoversche. In addition to that, PT Bank is 1.35 times more volatile than STRA Hannoversche Verkehrsbetriebe. It trades about -0.03 of its total potential returns per unit of risk. STRA Hannoversche Verkehrsbetriebe is currently generating about 0.05 per unit of volatility. If you would invest  960.00  in STRA Hannoversche Verkehrsbetriebe on February 3, 2025 and sell it today you would earn a total of  40.00  from holding STRA Hannoversche Verkehrsbetriebe or generate 4.17% return on investment over 90 days.

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

PT Bank CIMB  vs.  STRA Hannoversche Verkehrsbetr

PT Bank CIMB

Risk-Adjusted Performance

Very Weak

Over the last 90 days PT Bank CIMB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, PT Bank is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

ÜSTRA Hannoversche

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in STRA Hannoversche Verkehrsbetriebe are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, ÜSTRA Hannoversche is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with PT Bank and ÜSTRA Hannoversche

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

The idea behind PT Bank CIMB and STRA Hannoversche Verkehrsbetriebe 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.