Correlation Between PT Bank and Algoma Central
Can any of the company-specific risk be diversified away by investing in both PT Bank and Algoma Central 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 Algoma Central 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 Algoma Central, you can compare the effects of market volatilities on PT Bank and Algoma Central 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 Algoma Central. Check out your portfolio center. Please also check ongoing floating volatility patterns of PT Bank and Algoma Central.
Diversification Opportunities for PT Bank and Algoma Central
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between BKRKF and Algoma is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding PT Bank Rakyat and Algoma Central in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Algoma Central 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 Algoma Central. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Algoma Central has no effect on the direction of PT Bank i.e., PT Bank and Algoma Central go up and down completely randomly.
Pair Corralation between PT Bank and Algoma Central
Assuming the 90 days horizon PT Bank Rakyat is expected to under-perform the Algoma Central. In addition to that, PT Bank is 5.59 times more volatile than Algoma Central. It trades about -0.07 of its total potential returns per unit of risk. Algoma Central is currently generating about 0.03 per unit of volatility. If you would invest 1,075 in Algoma Central on September 3, 2024 and sell it today you would earn a total of 15.00 from holding Algoma Central or generate 1.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
PT Bank Rakyat vs. Algoma Central
Performance |
| Timeline |
| PT Bank Rakyat |
| Algoma Central |
PT Bank and Algoma Central Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PT Bank and Algoma Central
The main advantage of trading using opposite PT Bank and Algoma Central positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PT Bank position performs unexpectedly, Algoma Central 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 Algoma Central will offset losses from the drop in Algoma Central's long position.| PT Bank vs. Bank Mandiri Persero | PT Bank vs. Piraeus Bank SA | PT Bank vs. Eurobank Ergasias Services | PT Bank vs. Kasikornbank Public Co |
| Algoma Central vs. TOMI Environmental Solutions | Algoma Central vs. SCOR PK | Algoma Central vs. HUMANA INC | Algoma Central vs. Aquagold International |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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