Correlation Between PT Bank and International Consolidated
Can any of the company-specific risk be diversified away by investing in both PT Bank and International Consolidated 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 International Consolidated 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 International Consolidated Airlines, you can compare the effects of market volatilities on PT Bank and International Consolidated 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 International Consolidated. Check out your portfolio center. Please also check ongoing floating volatility patterns of PT Bank and International Consolidated.
Diversification Opportunities for PT Bank and International Consolidated
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between BKRKF and International is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding PT Bank Rakyat and International Consolidated Air in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Consolidated 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 International Consolidated. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Consolidated has no effect on the direction of PT Bank i.e., PT Bank and International Consolidated go up and down completely randomly.
Pair Corralation between PT Bank and International Consolidated
Assuming the 90 days horizon PT Bank Rakyat is expected to under-perform the International Consolidated. But the pink sheet apears to be less risky and, when comparing its historical volatility, PT Bank Rakyat is 1.01 times less risky than International Consolidated. The pink sheet trades about -0.03 of its potential returns per unit of risk. The International Consolidated Airlines is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 270.00 in International Consolidated Airlines on August 30, 2024 and sell it today you would earn a total of 51.00 from holding International Consolidated Airlines or generate 18.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 97.73% |
| Values | Daily Returns |
PT Bank Rakyat vs. International Consolidated Air
Performance |
| Timeline |
| PT Bank Rakyat |
| International Consolidated |
PT Bank and International Consolidated Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PT Bank and International Consolidated
The main advantage of trading using opposite PT Bank and International Consolidated positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PT Bank position performs unexpectedly, International Consolidated 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 International Consolidated will offset losses from the drop in International Consolidated's long position.The idea behind PT Bank Rakyat and International Consolidated Airlines 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.| International Consolidated vs. Deutsche Lufthansa AG | International Consolidated vs. Air France KLM | International Consolidated vs. Singapore Airlines | International Consolidated vs. Sun Country Airlines |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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