Correlation Between PT Bank and SINOPHARM GROUP
Can any of the company-specific risk be diversified away by investing in both PT Bank and SINOPHARM GROUP 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 SINOPHARM GROUP 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 SINOPHARM GROUP LTD, you can compare the effects of market volatilities on PT Bank and SINOPHARM GROUP 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 SINOPHARM GROUP. Check out your portfolio center. Please also check ongoing floating volatility patterns of PT Bank and SINOPHARM GROUP.
Diversification Opportunities for PT Bank and SINOPHARM GROUP
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between BKRKF and SINOPHARM is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding PT Bank Rakyat and SINOPHARM GROUP LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SINOPHARM GROUP LTD 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 SINOPHARM GROUP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SINOPHARM GROUP LTD has no effect on the direction of PT Bank i.e., PT Bank and SINOPHARM GROUP go up and down completely randomly.
Pair Corralation between PT Bank and SINOPHARM GROUP
Assuming the 90 days horizon PT Bank Rakyat is expected to generate 2.62 times more return on investment than SINOPHARM GROUP. However, PT Bank is 2.62 times more volatile than SINOPHARM GROUP LTD. It trades about 0.02 of its potential returns per unit of risk. SINOPHARM GROUP LTD is currently generating about 0.01 per unit of risk. If you would invest 32.00 in PT Bank Rakyat on August 27, 2024 and sell it today you would lose (5.00) from holding PT Bank Rakyat or give up 15.62% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 74.84% |
| Values | Daily Returns |
PT Bank Rakyat vs. SINOPHARM GROUP LTD
Performance |
| Timeline |
| PT Bank Rakyat |
| SINOPHARM GROUP LTD |
PT Bank and SINOPHARM GROUP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PT Bank and SINOPHARM GROUP
The main advantage of trading using opposite PT Bank and SINOPHARM GROUP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PT Bank position performs unexpectedly, SINOPHARM GROUP 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 SINOPHARM GROUP will offset losses from the drop in SINOPHARM GROUP's long position.The idea behind PT Bank Rakyat and SINOPHARM GROUP LTD 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.| SINOPHARM GROUP vs. McKesson | SINOPHARM GROUP vs. Cardinal Health | SINOPHARM GROUP vs. Henry Schein | SINOPHARM GROUP vs. Patterson Companies |
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 Stocks Directory module to find actively traded stocks across global markets.
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