Correlation Between PT Bank and Amadeus IT
Can any of the company-specific risk be diversified away by investing in both PT Bank and Amadeus IT 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 Amadeus IT 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 Amadeus IT Group, you can compare the effects of market volatilities on PT Bank and Amadeus IT 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 Amadeus IT. Check out your portfolio center. Please also check ongoing floating volatility patterns of PT Bank and Amadeus IT.
Diversification Opportunities for PT Bank and Amadeus IT
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between BKRKF and Amadeus is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding PT Bank Rakyat and Amadeus IT Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amadeus IT Group 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 Amadeus IT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amadeus IT Group has no effect on the direction of PT Bank i.e., PT Bank and Amadeus IT go up and down completely randomly.
Pair Corralation between PT Bank and Amadeus IT
Assuming the 90 days horizon PT Bank Rakyat is expected to generate 2.85 times more return on investment than Amadeus IT. However, PT Bank is 2.85 times more volatile than Amadeus IT Group. It trades about 0.0 of its potential returns per unit of risk. Amadeus IT Group is currently generating about -0.04 per unit of risk. If you would invest 29.00 in PT Bank Rakyat on August 27, 2024 and sell it today you would lose (2.00) from holding PT Bank Rakyat or give up 6.9% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
PT Bank Rakyat vs. Amadeus IT Group
Performance |
| Timeline |
| PT Bank Rakyat |
| Amadeus IT Group |
PT Bank and Amadeus IT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PT Bank and Amadeus IT
The main advantage of trading using opposite PT Bank and Amadeus IT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PT Bank position performs unexpectedly, Amadeus IT 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 Amadeus IT will offset losses from the drop in Amadeus IT's long position.The idea behind PT Bank Rakyat and Amadeus IT Group 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.| Amadeus IT vs. SosTravel SPA | Amadeus IT vs. Arma Services | Amadeus IT vs. Transat AT | Amadeus IT vs. Airbnb Inc |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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