Correlation Between PT Bank and First National
Can any of the company-specific risk be diversified away by investing in both PT Bank and First National 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 First National 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 First National of, you can compare the effects of market volatilities on PT Bank and First National 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 First National. Check out your portfolio center. Please also check ongoing floating volatility patterns of PT Bank and First National.
Diversification Opportunities for PT Bank and First National
-0.68 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between BKRKF and First is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding PT Bank Rakyat and First National of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First National 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 First National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First National has no effect on the direction of PT Bank i.e., PT Bank and First National go up and down completely randomly.
Pair Corralation between PT Bank and First National
Assuming the 90 days horizon PT Bank Rakyat is expected to generate 7.04 times more return on investment than First National. However, PT Bank is 7.04 times more volatile than First National of. It trades about 0.01 of its potential returns per unit of risk. First National of is currently generating about -0.04 per unit of risk. If you would invest 26.00 in PT Bank Rakyat on August 31, 2024 and sell it today you would lose (1.00) from holding PT Bank Rakyat or give up 3.85% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
PT Bank Rakyat vs. First National of
Performance |
| Timeline |
| PT Bank Rakyat |
| First National |
PT Bank and First National Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PT Bank and First National
The main advantage of trading using opposite PT Bank and First National positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PT Bank position performs unexpectedly, First National 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 First National will offset losses from the drop in First National'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 |
| First National vs. HUMANA INC | First National vs. SCOR PK | First National vs. Aquagold International | First National vs. Thrivent High Yield |
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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