Correlation Between Banco Bradesco and PT Bank
Can any of the company-specific risk be diversified away by investing in both Banco Bradesco 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 Banco Bradesco and PT Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Banco Bradesco SA and PT Bank Rakyat, you can compare the effects of market volatilities on Banco Bradesco 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 Banco Bradesco with a short position of PT Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Banco Bradesco and PT Bank.
Diversification Opportunities for Banco Bradesco and PT Bank
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Banco and BKRKF is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Banco Bradesco SA 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 Banco Bradesco 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 Banco Bradesco SA 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 Banco Bradesco i.e., Banco Bradesco and PT Bank go up and down completely randomly.
Pair Corralation between Banco Bradesco and PT Bank
Considering the 90-day investment horizon Banco Bradesco SA is expected to under-perform the PT Bank. But the stock apears to be less risky and, when comparing its historical volatility, Banco Bradesco SA is 2.45 times less risky than PT Bank. The stock trades about -0.32 of its potential returns per unit of risk. The PT Bank Rakyat is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest 27.00 in PT Bank Rakyat on September 23, 2024 and sell it today you would lose (3.00) from holding PT Bank Rakyat or give up 11.11% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Banco Bradesco SA vs. PT Bank Rakyat
Performance |
| Timeline |
| Banco Bradesco SA |
| PT Bank Rakyat |
Banco Bradesco and PT Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Banco Bradesco and PT Bank
The main advantage of trading using opposite Banco Bradesco and PT Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Banco Bradesco 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.| Banco Bradesco vs. Shinhan Financial Group | Banco Bradesco vs. KB Financial Group | Banco Bradesco vs. Banco De Chile | Banco Bradesco vs. Orix Corp Ads |
| PT Bank vs. Banco Bradesco SA | PT Bank vs. Itau Unibanco Banco | PT Bank vs. Lloyds Banking Group | PT Bank vs. Deutsche Bank AG |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
Other Complementary Tools
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
| Technical Analysis Check basic technical indicators and analysis based on most latest market data | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments |