Correlation Between PT Bank and Etao International
Can any of the company-specific risk be diversified away by investing in both PT Bank and Etao International 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 Etao International 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 Etao International Co,, you can compare the effects of market volatilities on PT Bank and Etao International 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 Etao International. Check out your portfolio center. Please also check ongoing floating volatility patterns of PT Bank and Etao International.
Diversification Opportunities for PT Bank and Etao International
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between BKRKF and Etao is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding PT Bank Rakyat and Etao International Co, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Etao International Co, 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 Etao International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Etao International Co, has no effect on the direction of PT Bank i.e., PT Bank and Etao International go up and down completely randomly.
Pair Corralation between PT Bank and Etao International
Assuming the 90 days horizon PT Bank is expected to generate 23.37 times less return on investment than Etao International. But when comparing it to its historical volatility, PT Bank Rakyat is 10.48 times less risky than Etao International. It trades about 0.01 of its potential returns per unit of risk. Etao International Co, is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 14,300 in Etao International Co, on September 1, 2024 and sell it today you would lose (14,295) from holding Etao International Co, or give up 99.97% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 97.81% |
| Values | Daily Returns |
PT Bank Rakyat vs. Etao International Co,
Performance |
| Timeline |
| PT Bank Rakyat |
| Etao International Co, |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
PT Bank and Etao International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PT Bank and Etao International
The main advantage of trading using opposite PT Bank and Etao International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PT Bank position performs unexpectedly, Etao International 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 Etao International will offset losses from the drop in Etao International's long position.| PT Bank vs. Piraeus Bank SA | PT Bank vs. Turkiye Garanti Bankasi | PT Bank vs. Delhi Bank Corp | PT Bank vs. Uwharrie Capital Corp |
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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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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