Correlation Between PT Bank and Pacific Financial
Can any of the company-specific risk be diversified away by investing in both PT Bank and Pacific Financial 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 Pacific Financial 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 Pacific Financial Corp, you can compare the effects of market volatilities on PT Bank and Pacific Financial 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 Pacific Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of PT Bank and Pacific Financial.
Diversification Opportunities for PT Bank and Pacific Financial
-0.79 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between BKRKF and Pacific is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding PT Bank Rakyat and Pacific Financial Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pacific Financial Corp 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 Pacific Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pacific Financial Corp has no effect on the direction of PT Bank i.e., PT Bank and Pacific Financial go up and down completely randomly.
Pair Corralation between PT Bank and Pacific Financial
Assuming the 90 days horizon PT Bank is expected to generate 1.89 times less return on investment than Pacific Financial. In addition to that, PT Bank is 3.87 times more volatile than Pacific Financial Corp. It trades about 0.02 of its total potential returns per unit of risk. Pacific Financial Corp is currently generating about 0.16 per unit of volatility. If you would invest 975.00 in Pacific Financial Corp on September 2, 2024 and sell it today you would earn a total of 325.00 from holding Pacific Financial Corp or generate 33.33% 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. Pacific Financial Corp
Performance |
| Timeline |
| PT Bank Rakyat |
| Pacific Financial Corp |
PT Bank and Pacific Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PT Bank and Pacific Financial
The main advantage of trading using opposite PT Bank and Pacific Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PT Bank position performs unexpectedly, Pacific Financial 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 Pacific Financial will offset losses from the drop in Pacific Financial's long position.The idea behind PT Bank Rakyat and Pacific Financial Corp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Pacific Financial vs. Pioneer Bankcorp | Pacific Financial vs. Liberty Northwest Bancorp | Pacific Financial vs. First Community | Pacific Financial vs. Coeur dAlene Bancorp |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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