Correlation Between PT Bank and China Tower
Can any of the company-specific risk be diversified away by investing in both PT Bank and China Tower 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 China Tower 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 China Tower, you can compare the effects of market volatilities on PT Bank and China Tower 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 China Tower. Check out your portfolio center. Please also check ongoing floating volatility patterns of PT Bank and China Tower.
Diversification Opportunities for PT Bank and China Tower
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between BKRKF and China is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding PT Bank Rakyat and China Tower in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Tower 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 China Tower. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Tower has no effect on the direction of PT Bank i.e., PT Bank and China Tower go up and down completely randomly.
Pair Corralation between PT Bank and China Tower
Assuming the 90 days horizon PT Bank is expected to generate 47.81 times less return on investment than China Tower. But when comparing it to its historical volatility, PT Bank Rakyat is 20.0 times less risky than China Tower. It trades about 0.09 of its potential returns per unit of risk. China Tower is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 14.00 in China Tower on November 28, 2024 and sell it today you would earn a total of 0.00 from holding China Tower or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 90.48% |
| Values | Daily Returns |
PT Bank Rakyat vs. China Tower
Performance |
| Timeline |
| PT Bank Rakyat |
| China Tower |
PT Bank and China Tower Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PT Bank and China Tower
The main advantage of trading using opposite PT Bank and China Tower positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PT Bank position performs unexpectedly, China Tower 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 China Tower will offset losses from the drop in China Tower'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 |
| China Tower vs. Singapore Telecommunications Limited | China Tower vs. Vodafone Group PLC | China Tower vs. PT Indosat Tbk | China Tower vs. KDDI Corp |
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 Stocks Directory module to find actively traded stocks across global markets.
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