Correlation Between Avanos Medical and PT Bank
Can any of the company-specific risk be diversified away by investing in both Avanos Medical 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 Avanos Medical and PT Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Avanos Medical and PT Bank Maybank, you can compare the effects of market volatilities on Avanos Medical 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 Avanos Medical with a short position of PT Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Avanos Medical and PT Bank.
Diversification Opportunities for Avanos Medical and PT Bank
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Avanos and BOZA is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Avanos Medical and PT Bank Maybank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PT Bank Maybank and Avanos Medical 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 Avanos Medical 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 Maybank has no effect on the direction of Avanos Medical i.e., Avanos Medical and PT Bank go up and down completely randomly.
Pair Corralation between Avanos Medical and PT Bank
Assuming the 90 days trading horizon Avanos Medical is expected to under-perform the PT Bank. In addition to that, Avanos Medical is 1.33 times more volatile than PT Bank Maybank. It trades about -0.1 of its total potential returns per unit of risk. PT Bank Maybank is currently generating about -0.03 per unit of volatility. If you would invest 1.30 in PT Bank Maybank on August 31, 2024 and sell it today you would lose (0.05) from holding PT Bank Maybank or give up 3.85% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Avanos Medical vs. PT Bank Maybank
Performance |
| Timeline |
| Avanos Medical |
| PT Bank Maybank |
Avanos Medical and PT Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Avanos Medical and PT Bank
The main advantage of trading using opposite Avanos Medical and PT Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Avanos Medical 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.| Avanos Medical vs. Apple Inc | Avanos Medical vs. Apple Inc | Avanos Medical vs. Apple Inc | Avanos Medical vs. Apple Inc |
| PT Bank vs. China Merchants Bank | PT Bank vs. PT Bank Central | PT Bank vs. State Bank of | PT Bank vs. PT Bank Rakyat |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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