Correlation Between PT Bank and Ambase Corp
Can any of the company-specific risk be diversified away by investing in both PT Bank and Ambase Corp 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 PT Bank and Ambase Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PT Bank Rakyat and Ambase Corp, you can compare the effects of market volatilities on PT Bank and Ambase Corp 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 PT Bank with a short position of Ambase Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of PT Bank and Ambase Corp.
Diversification Opportunities for PT Bank and Ambase Corp
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between BKRKF and Ambase is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding PT Bank Rakyat and Ambase Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ambase Corp and PT Bank 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 PT Bank Rakyat are associated (or correlated) with Ambase Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ambase Corp has no effect on the direction of PT Bank i.e., PT Bank and Ambase Corp go up and down completely randomly.
Pair Corralation between PT Bank and Ambase Corp
Assuming the 90 days horizon PT Bank is expected to generate 5.25 times less return on investment than Ambase Corp. But when comparing it to its historical volatility, PT Bank Rakyat is 1.14 times less risky than Ambase Corp. It trades about 0.01 of its potential returns per unit of risk. Ambase Corp is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 20.00 in Ambase Corp on September 2, 2024 and sell it today you would earn a total of 15.00 from holding Ambase Corp or generate 75.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 85.89% |
| Values | Daily Returns |
PT Bank Rakyat vs. Ambase Corp
Performance |
| Timeline |
| PT Bank Rakyat |
| Ambase Corp |
PT Bank and Ambase Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PT Bank and Ambase Corp
The main advantage of trading using opposite PT Bank and Ambase Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PT Bank position performs unexpectedly, Ambase Corp 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 Ambase Corp will offset losses from the drop in Ambase Corp's long position.The idea behind PT Bank Rakyat and Ambase Corp 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.| Ambase Corp vs. Adler Group SA | Ambase Corp vs. Aztec Land Comb | Ambase Corp vs. Bridgemarq Real Estate | Ambase Corp vs. Agritek Holdings |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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