Correlation Between PT Bank and Cashmere Valley
Can any of the company-specific risk be diversified away by investing in both PT Bank and Cashmere Valley 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 Cashmere Valley 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 Cashmere Valley Bank, you can compare the effects of market volatilities on PT Bank and Cashmere Valley 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 Cashmere Valley. Check out your portfolio center. Please also check ongoing floating volatility patterns of PT Bank and Cashmere Valley.
Diversification Opportunities for PT Bank and Cashmere Valley
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between BKRKF and Cashmere is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding PT Bank Rakyat and Cashmere Valley Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cashmere Valley Bank 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 Cashmere Valley. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cashmere Valley Bank has no effect on the direction of PT Bank i.e., PT Bank and Cashmere Valley go up and down completely randomly.
Pair Corralation between PT Bank and Cashmere Valley
Assuming the 90 days horizon PT Bank is expected to generate 2.17 times less return on investment than Cashmere Valley. In addition to that, PT Bank is 10.28 times more volatile than Cashmere Valley Bank. It trades about 0.01 of its total potential returns per unit of risk. Cashmere Valley Bank is currently generating about 0.31 per unit of volatility. If you would invest 5,602 in Cashmere Valley Bank on August 31, 2024 and sell it today you would earn a total of 298.00 from holding Cashmere Valley Bank or generate 5.32% 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. Cashmere Valley Bank
Performance |
| Timeline |
| PT Bank Rakyat |
| Cashmere Valley Bank |
PT Bank and Cashmere Valley Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PT Bank and Cashmere Valley
The main advantage of trading using opposite PT Bank and Cashmere Valley positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PT Bank position performs unexpectedly, Cashmere Valley 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 Cashmere Valley will offset losses from the drop in Cashmere Valley'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 |
| Cashmere Valley vs. Santa Cruz County | Cashmere Valley vs. Montfort Capital Corp | Cashmere Valley vs. Mullen Group | Cashmere Valley vs. Cartier Resources |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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