Correlation Between PT Bank and Eco (Atlantic)
Can any of the company-specific risk be diversified away by investing in both PT Bank and Eco (Atlantic) 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 Eco (Atlantic) 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 Eco Oil Gas, you can compare the effects of market volatilities on PT Bank and Eco (Atlantic) 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 Eco (Atlantic). Check out your portfolio center. Please also check ongoing floating volatility patterns of PT Bank and Eco (Atlantic).
Diversification Opportunities for PT Bank and Eco (Atlantic)
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between BKRKF and Eco is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding PT Bank Rakyat and Eco Oil Gas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eco (Atlantic) 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 Eco (Atlantic). Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eco (Atlantic) has no effect on the direction of PT Bank i.e., PT Bank and Eco (Atlantic) go up and down completely randomly.
Pair Corralation between PT Bank and Eco (Atlantic)
Assuming the 90 days horizon PT Bank is expected to generate 1.43 times less return on investment than Eco (Atlantic). But when comparing it to its historical volatility, PT Bank Rakyat is 1.19 times less risky than Eco (Atlantic). It trades about 0.04 of its potential returns per unit of risk. Eco Oil Gas is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 12.00 in Eco Oil Gas on August 30, 2024 and sell it today you would earn a total of 0.00 from holding Eco Oil Gas or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
PT Bank Rakyat vs. Eco Oil Gas
Performance |
| Timeline |
| PT Bank Rakyat |
| Eco (Atlantic) |
PT Bank and Eco (Atlantic) Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PT Bank and Eco (Atlantic)
The main advantage of trading using opposite PT Bank and Eco (Atlantic) positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PT Bank position performs unexpectedly, Eco (Atlantic) 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 Eco (Atlantic) will offset losses from the drop in Eco (Atlantic)'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 |
| Eco (Atlantic) vs. CGX Energy | Eco (Atlantic) vs. Frontera Energy Corp | Eco (Atlantic) vs. Africa Energy Corp | Eco (Atlantic) vs. Africa Oil 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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