Correlation Between PT Bank and American Picture
Can any of the company-specific risk be diversified away by investing in both PT Bank and American Picture 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 American Picture 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 American Picture House, you can compare the effects of market volatilities on PT Bank and American Picture 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 American Picture. Check out your portfolio center. Please also check ongoing floating volatility patterns of PT Bank and American Picture.
Diversification Opportunities for PT Bank and American Picture
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between BKRKF and American is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding PT Bank Rakyat and American Picture House in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Picture House 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 American Picture. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Picture House has no effect on the direction of PT Bank i.e., PT Bank and American Picture go up and down completely randomly.
Pair Corralation between PT Bank and American Picture
Assuming the 90 days horizon PT Bank Rakyat is expected to under-perform the American Picture. In addition to that, PT Bank is 2.38 times more volatile than American Picture House. It trades about 0.0 of its total potential returns per unit of risk. American Picture House is currently generating about 0.06 per unit of volatility. If you would invest 28.00 in American Picture House on August 28, 2024 and sell it today you would earn a total of 1.00 from holding American Picture House or generate 3.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
PT Bank Rakyat vs. American Picture House
Performance |
| Timeline |
| PT Bank Rakyat |
| American Picture House |
PT Bank and American Picture Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PT Bank and American Picture
The main advantage of trading using opposite PT Bank and American Picture positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PT Bank position performs unexpectedly, American Picture 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 American Picture will offset losses from the drop in American Picture's long position.The idea behind PT Bank Rakyat and American Picture House 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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