Correlation Between PT Bank and Da32 Life
Can any of the company-specific risk be diversified away by investing in both PT Bank and Da32 Life 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 Da32 Life 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 Da32 Life Science, you can compare the effects of market volatilities on PT Bank and Da32 Life 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 Da32 Life. Check out your portfolio center. Please also check ongoing floating volatility patterns of PT Bank and Da32 Life.
Diversification Opportunities for PT Bank and Da32 Life
Excellent diversification
The 3 months correlation between BKRKF and Da32 is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding PT Bank Rakyat and Da32 Life Science in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Da32 Life Science 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 Da32 Life. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Da32 Life Science has no effect on the direction of PT Bank i.e., PT Bank and Da32 Life go up and down completely randomly.
Pair Corralation between PT Bank and Da32 Life
Assuming the 90 days horizon PT Bank Rakyat is expected to generate 16.24 times more return on investment than Da32 Life. However, PT Bank is 16.24 times more volatile than Da32 Life Science. It trades about 0.02 of its potential returns per unit of risk. Da32 Life Science is currently generating about 0.08 per unit of risk. If you would invest 31.00 in PT Bank Rakyat on August 30, 2024 and sell it today you would lose (5.00) from holding PT Bank Rakyat or give up 16.13% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 38.27% |
| Values | Daily Returns |
PT Bank Rakyat vs. Da32 Life Science
Performance |
| Timeline |
| PT Bank Rakyat |
| Da32 Life Science |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
PT Bank and Da32 Life Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PT Bank and Da32 Life
The main advantage of trading using opposite PT Bank and Da32 Life positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PT Bank position performs unexpectedly, Da32 Life 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 Da32 Life will offset losses from the drop in Da32 Life'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 |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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