Correlation Between PT Global and TRAVEL +
Can any of the company-specific risk be diversified away by investing in both PT Global and TRAVEL + 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 TRAVEL + 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 TRAVEL LEISURE DL 01, you can compare the effects of market volatilities on PT Global and TRAVEL + 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 TRAVEL +. Check out your portfolio center. Please also check ongoing floating volatility patterns of PT Global and TRAVEL +.
Diversification Opportunities for PT Global and TRAVEL +
Pay attention - limited upside
The 3 months correlation between 06L and TRAVEL is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding PT Global Mediacom and TRAVEL LEISURE DL 01 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TRAVEL LEISURE DL 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 TRAVEL +. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TRAVEL LEISURE DL has no effect on the direction of PT Global i.e., PT Global and TRAVEL + go up and down completely randomly.
Pair Corralation between PT Global and TRAVEL +
Assuming the 90 days trading horizon PT Global Mediacom is expected to generate 5.12 times more return on investment than TRAVEL +. However, PT Global is 5.12 times more volatile than TRAVEL LEISURE DL 01. It trades about 0.02 of its potential returns per unit of risk. TRAVEL LEISURE DL 01 is currently generating about 0.06 per unit of risk. If you would invest 1.15 in PT Global Mediacom on September 3, 2024 and sell it today you would lose (0.40) from holding PT Global Mediacom or give up 34.78% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
PT Global Mediacom vs. TRAVEL LEISURE DL 01
Performance |
| Timeline |
| PT Global Mediacom |
| TRAVEL LEISURE DL |
PT Global and TRAVEL + Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PT Global and TRAVEL +
The main advantage of trading using opposite PT Global and TRAVEL + positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PT Global position performs unexpectedly, TRAVEL + 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 TRAVEL + will offset losses from the drop in TRAVEL +'s long position.The idea behind PT Global Mediacom and TRAVEL LEISURE DL 01 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.| TRAVEL + vs. TRIPCOM GROUP DL 00125 | TRAVEL + vs. TUI AG | TRAVEL + vs. TripAdvisor | TRAVEL + vs. TRAINLINE PLC LS |
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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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