Correlation Between Western Copper and PT Bank
Can any of the company-specific risk be diversified away by investing in both Western Copper 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 Western Copper and PT Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Western Copper and and PT Bank Rakyat, you can compare the effects of market volatilities on Western Copper 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 Western Copper with a short position of PT Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Copper and PT Bank.
Diversification Opportunities for Western Copper and PT Bank
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Western and BYRA is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Western Copper and 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 Western Copper 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 Western Copper and 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 Western Copper i.e., Western Copper and PT Bank go up and down completely randomly.
Pair Corralation between Western Copper and PT Bank
Assuming the 90 days trading horizon Western Copper and is expected to under-perform the PT Bank. But the stock apears to be less risky and, when comparing its historical volatility, Western Copper and is 1.94 times less risky than PT Bank. The stock trades about -0.02 of its potential returns per unit of risk. The PT Bank Rakyat is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 28.00 in PT Bank Rakyat on September 20, 2024 and sell it today you would lose (4.00) from holding PT Bank Rakyat or give up 14.29% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Western Copper and vs. PT Bank Rakyat
Performance |
| Timeline |
| Western Copper |
| PT Bank Rakyat |
Western Copper and PT Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Copper and PT Bank
The main advantage of trading using opposite Western Copper and PT Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Copper 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.| Western Copper vs. BHP Group Limited | Western Copper vs. Vale SA | Western Copper vs. Superior Plus Corp | Western Copper vs. SIVERS SEMICONDUCTORS AB |
| PT Bank vs. PT Bank Maybank | PT Bank vs. Commonwealth Bank of | PT Bank vs. Western Copper and | PT Bank vs. REVO INSURANCE SPA |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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