Correlation Between Boston Beer and PT Bank
Can any of the company-specific risk be diversified away by investing in both Boston Beer 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 Boston Beer and PT Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Boston Beer and PT Bank Central, you can compare the effects of market volatilities on Boston Beer 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 Boston Beer with a short position of PT Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Boston Beer and PT Bank.
Diversification Opportunities for Boston Beer and PT Bank
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Boston and BZG2 is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding The Boston Beer and PT Bank Central in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PT Bank Central and Boston Beer 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 The Boston Beer 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 Central has no effect on the direction of Boston Beer i.e., Boston Beer and PT Bank go up and down completely randomly.
Pair Corralation between Boston Beer and PT Bank
Assuming the 90 days trading horizon The Boston Beer is expected to under-perform the PT Bank. But the stock apears to be less risky and, when comparing its historical volatility, The Boston Beer is 2.61 times less risky than PT Bank. The stock trades about -0.11 of its potential returns per unit of risk. The PT Bank Central is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 61.00 in PT Bank Central on October 25, 2024 and sell it today you would lose (3.00) from holding PT Bank Central or give up 4.92% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
The Boston Beer vs. PT Bank Central
Performance |
Timeline |
Boston Beer |
PT Bank Central |
Boston Beer and PT Bank Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Boston Beer and PT Bank
The main advantage of trading using opposite Boston Beer and PT Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Boston Beer 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.Boston Beer vs. Forsys Metals Corp | Boston Beer vs. Harmony Gold Mining | Boston Beer vs. MAGNUM MINING EXP | Boston Beer vs. SERI INDUSTRIAL EO |
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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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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