Correlation Between CN MODERN and PT Bank
Can any of the company-specific risk be diversified away by investing in both CN MODERN 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 CN MODERN and PT Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CN MODERN DAIRY and PT Bank Rakyat, you can compare the effects of market volatilities on CN MODERN 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 CN MODERN with a short position of PT Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of CN MODERN and PT Bank.
Diversification Opportunities for CN MODERN and PT Bank
Very good diversification
The 3 months correlation between 07M and BYRA is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding CN MODERN DAIRY 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 CN MODERN 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 CN MODERN DAIRY 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 CN MODERN i.e., CN MODERN and PT Bank go up and down completely randomly.
Pair Corralation between CN MODERN and PT Bank
Assuming the 90 days trading horizon CN MODERN DAIRY is expected to generate 0.69 times more return on investment than PT Bank. However, CN MODERN DAIRY is 1.44 times less risky than PT Bank. It trades about 0.13 of its potential returns per unit of risk. PT Bank Rakyat is currently generating about 0.05 per unit of risk. If you would invest 9.25 in CN MODERN DAIRY on October 30, 2024 and sell it today you would earn a total of 1.75 from holding CN MODERN DAIRY or generate 18.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CN MODERN DAIRY vs. PT Bank Rakyat
Performance |
| Timeline |
| CN MODERN DAIRY |
| PT Bank Rakyat |
CN MODERN and PT Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CN MODERN and PT Bank
The main advantage of trading using opposite CN MODERN and PT Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CN MODERN 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.| CN MODERN vs. CHAMPION IRON | CN MODERN vs. Coffee Holding Co | CN MODERN vs. Micron Technology | CN MODERN vs. Check Point Software |
| PT Bank vs. Titan Machinery | PT Bank vs. Universal Entertainment | PT Bank vs. PENN Entertainment | PT Bank vs. Darden Restaurants |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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