Correlation Between PT Bank and National Bank
Can any of the company-specific risk be diversified away by investing in both PT Bank and National Bank 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 National Bank 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 National Bank of, you can compare the effects of market volatilities on PT Bank and National Bank 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 National Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of PT Bank and National Bank.
Diversification Opportunities for PT Bank and National Bank
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between BKRKF and National is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding PT Bank Rakyat and National Bank of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Bank 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 National Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Bank has no effect on the direction of PT Bank i.e., PT Bank and National Bank go up and down completely randomly.
Pair Corralation between PT Bank and National Bank
Assuming the 90 days horizon PT Bank Rakyat is expected to generate 3.52 times more return on investment than National Bank. However, PT Bank is 3.52 times more volatile than National Bank of. It trades about 0.01 of its potential returns per unit of risk. National Bank of is currently generating about -0.24 per unit of risk. If you would invest 26.00 in PT Bank Rakyat on September 1, 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 Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
PT Bank Rakyat vs. National Bank of
Performance |
| Timeline |
| PT Bank Rakyat |
| National Bank |
PT Bank and National Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PT Bank and National Bank
The main advantage of trading using opposite PT Bank and National Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PT Bank position performs unexpectedly, National Bank 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 National Bank will offset losses from the drop in National Bank'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 |
| National Bank vs. Piraeus Bank SA | National Bank vs. Turkiye Garanti Bankasi | National Bank vs. Delhi Bank Corp | National Bank vs. Uwharrie Capital 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 Transaction History module to view history of all your transactions and understand their impact on performance.
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