Correlation Between PT Bank and PT Bank

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

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

Diversification Opportunities for PT Bank and PT Bank

0.64

Correlation Coefficient

PT Bank  PT Bank

Poor diversification

The 3 months correlation between PQ9 and BYRA is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding PT Bank Mandiri and PT Bank Rakyat in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PT Bank Rakyat 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 Mandiri are associated (or correlated) with PT Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PT Bank Rakyat has no effect on the direction of PT Bank i.e., PT Bank and PT Bank go up and down completely randomly.

Pair Corralation between PT Bank and PT Bank

Assuming the 90 days horizon PT Bank Mandiri is expected to under-perform the PT Bank. In addition to that, PT Bank is 1.26 times more volatile than PT Bank Rakyat. It trades about -0.2 of its total potential returns per unit of risk. PT Bank Rakyat is currently generating about -0.23 per unit of volatility. If you would invest  27.00  in PT Bank Rakyat on August 18, 2024 and sell it today you would lose (3.00) from holding PT Bank Rakyat or give up 11.11% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.65%
Values	Daily Returns

PT Bank Mandiri  vs.  PT Bank Rakyat

PT Bank Mandiri

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PT Bank Mandiri 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 newest stock price disturbance, may contribute to mid-run losses for the stockholders.

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. In spite of comparatively stable basic indicators, PT Bank 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 PT Bank

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

The idea behind PT Bank Mandiri and PT Bank Rakyat 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.