Correlation Between PT Bank and Bank Central
Can any of the company-specific risk be diversified away by investing in both PT Bank and Bank Central 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 Bank Central 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 Bank Central Asia, you can compare the effects of market volatilities on PT Bank and Bank Central 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 Bank Central. Check out your portfolio center. Please also check ongoing floating volatility patterns of PT Bank and Bank Central.
Diversification Opportunities for PT Bank and Bank Central
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between BKRKF and Bank is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding PT Bank Rakyat and Bank Central Asia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank Central Asia 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 Bank Central. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank Central Asia has no effect on the direction of PT Bank i.e., PT Bank and Bank Central go up and down completely randomly.
Pair Corralation between PT Bank and Bank Central
Assuming the 90 days horizon PT Bank is expected to generate 2.88 times less return on investment than Bank Central. In addition to that, PT Bank is 3.7 times more volatile than Bank Central Asia. It trades about 0.0 of its total potential returns per unit of risk. Bank Central Asia is currently generating about 0.02 per unit of volatility. If you would invest 1,519 in Bank Central Asia on September 1, 2024 and sell it today you would earn a total of 42.00 from holding Bank Central Asia or generate 2.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 98.94% |
| Values | Daily Returns |
PT Bank Rakyat vs. Bank Central Asia
Performance |
| Timeline |
| PT Bank Rakyat |
| Bank Central Asia |
PT Bank and Bank Central Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PT Bank and Bank Central
The main advantage of trading using opposite PT Bank and Bank Central positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PT Bank position performs unexpectedly, Bank Central 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 Bank Central will offset losses from the drop in Bank Central'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 |
| Bank Central vs. Piraeus Bank SA | Bank Central vs. Turkiye Garanti Bankasi | Bank Central vs. Delhi Bank Corp | Bank Central 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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