Correlation Between PT Bank and First Ottawa
Can any of the company-specific risk be diversified away by investing in both PT Bank and First Ottawa 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 Ottawa 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 Ottawa Bancshares, you can compare the effects of market volatilities on PT Bank and First Ottawa 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 Ottawa. Check out your portfolio center. Please also check ongoing floating volatility patterns of PT Bank and First Ottawa.
Diversification Opportunities for PT Bank and First Ottawa
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between BKRKF and First is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding PT Bank Rakyat and First Ottawa Bancshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Ottawa Bancshares 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 Ottawa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Ottawa Bancshares has no effect on the direction of PT Bank i.e., PT Bank and First Ottawa go up and down completely randomly.
Pair Corralation between PT Bank and First Ottawa
Assuming the 90 days horizon PT Bank is expected to generate 3.11 times less return on investment than First Ottawa. In addition to that, PT Bank is 5.09 times more volatile than First Ottawa Bancshares. It trades about 0.02 of its total potential returns per unit of risk. First Ottawa Bancshares is currently generating about 0.32 per unit of volatility. If you would invest 13,000 in First Ottawa Bancshares on November 2, 2024 and sell it today you would earn a total of 1,500 from holding First Ottawa Bancshares or generate 11.54% 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. First Ottawa Bancshares
Performance |
| Timeline |
| PT Bank Rakyat |
| First Ottawa Bancshares |
PT Bank and First Ottawa Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PT Bank and First Ottawa
The main advantage of trading using opposite PT Bank and First Ottawa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PT Bank position performs unexpectedly, First Ottawa 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 Ottawa will offset losses from the drop in First Ottawa's long position.| PT Bank vs. First Hawaiian | PT Bank vs. Central Pacific Financial | PT Bank vs. Territorial Bancorp | PT Bank vs. Comerica |
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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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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