Correlation Between Beazer Homes and PT Bank

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Beazer Homes 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 Beazer Homes and PT Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Beazer Homes USA and PT Bank Rakyat, you can compare the effects of market volatilities on Beazer Homes 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 Beazer Homes with a short position of PT Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Beazer Homes and PT Bank.

Diversification Opportunities for Beazer Homes and PT Bank

0.41
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Beazer and BYRA is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Beazer Homes USA 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 Beazer Homes 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 Beazer Homes USA 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 Beazer Homes i.e., Beazer Homes and PT Bank go up and down completely randomly.

Pair Corralation between Beazer Homes and PT Bank

Assuming the 90 days trading horizon Beazer Homes USA is expected to under-perform the PT Bank. But the stock apears to be less risky and, when comparing its historical volatility, Beazer Homes USA is 4.08 times less risky than PT Bank. The stock trades about -0.29 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  23.00  in PT Bank Rakyat on October 30, 2024 and sell it today you would earn a total of  0.00  from holding PT Bank Rakyat or generate 0.0% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Beazer Homes USA  vs.  PT Bank Rakyat

 Performance 
       Timeline  
Beazer Homes USA 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Beazer Homes USA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Beazer Homes is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.
PT Bank Rakyat 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Weak
Over the last 90 days PT Bank Rakyat has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, PT Bank is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Beazer Homes and PT Bank Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Beazer Homes and PT Bank

The main advantage of trading using opposite Beazer Homes and PT Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Beazer Homes 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.
The idea behind Beazer Homes USA and PT Bank Rakyat pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.

Other Complementary Tools

Sign In To Macroaxis
Sign in to explore Macroaxis' wealth optimization platform and fintech modules
CEOs Directory
Screen CEOs from public companies around the world
AI Portfolio Architect
Use AI to generate optimal portfolios and find profitable investment opportunities
Portfolio Analyzer
Portfolio analysis module that provides access to portfolio diagnostics and optimization engine
Stock Screener
Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook.