Correlation Between PT Global and China Construction
Can any of the company-specific risk be diversified away by investing in both PT Global and China Construction 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 Global and China Construction into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PT Global Mediacom and China Construction Bank, you can compare the effects of market volatilities on PT Global and China Construction 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 Global with a short position of China Construction. Check out your portfolio center. Please also check ongoing floating volatility patterns of PT Global and China Construction.
Diversification Opportunities for PT Global and China Construction
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between 06L and China is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding PT Global Mediacom and China Construction Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Construction Bank and PT Global 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 Global Mediacom are associated (or correlated) with China Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Construction Bank has no effect on the direction of PT Global i.e., PT Global and China Construction go up and down completely randomly.
Pair Corralation between PT Global and China Construction
Assuming the 90 days trading horizon PT Global Mediacom is expected to generate 7.71 times more return on investment than China Construction. However, PT Global is 7.71 times more volatile than China Construction Bank. It trades about 0.06 of its potential returns per unit of risk. China Construction Bank is currently generating about 0.03 per unit of risk. If you would invest 0.80 in PT Global Mediacom on September 3, 2024 and sell it today you would lose (0.05) from holding PT Global Mediacom or give up 6.25% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
PT Global Mediacom vs. China Construction Bank
Performance |
| Timeline |
| PT Global Mediacom |
| China Construction Bank |
PT Global and China Construction Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PT Global and China Construction
The main advantage of trading using opposite PT Global and China Construction positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PT Global position performs unexpectedly, China Construction 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 China Construction will offset losses from the drop in China Construction's long position.The idea behind PT Global Mediacom and China Construction Bank 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.Check out your portfolio center.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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
Other Complementary Tools
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins | |
| Technical Analysis Check basic technical indicators and analysis based on most latest market data | |
| Money Managers Screen money managers from public funds and ETFs managed around the world | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume |