Correlation Between PT Bank and Salzgitter
Can any of the company-specific risk be diversified away by investing in both PT Bank and Salzgitter 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 Salzgitter 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 Salzgitter AG ADR, you can compare the effects of market volatilities on PT Bank and Salzgitter 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 Salzgitter. Check out your portfolio center. Please also check ongoing floating volatility patterns of PT Bank and Salzgitter.
Diversification Opportunities for PT Bank and Salzgitter
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between BKRKF and Salzgitter is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding PT Bank Rakyat and Salzgitter AG ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Salzgitter AG ADR 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 Salzgitter. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Salzgitter AG ADR has no effect on the direction of PT Bank i.e., PT Bank and Salzgitter go up and down completely randomly.
Pair Corralation between PT Bank and Salzgitter
Assuming the 90 days horizon PT Bank is expected to generate 8.88 times less return on investment than Salzgitter. In addition to that, PT Bank is 1.11 times more volatile than Salzgitter AG ADR. It trades about 0.01 of its total potential returns per unit of risk. Salzgitter AG ADR is currently generating about 0.14 per unit of volatility. If you would invest 150.00 in Salzgitter AG ADR on August 31, 2024 and sell it today you would earn a total of 27.00 from holding Salzgitter AG ADR or generate 18.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
PT Bank Rakyat vs. Salzgitter AG ADR
Performance |
| Timeline |
| PT Bank Rakyat |
| Salzgitter AG ADR |
PT Bank and Salzgitter Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PT Bank and Salzgitter
The main advantage of trading using opposite PT Bank and Salzgitter positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PT Bank position performs unexpectedly, Salzgitter 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 Salzgitter will offset losses from the drop in Salzgitter's long position.| PT Bank vs. Bank Mandiri Persero | PT Bank vs. Piraeus Bank SA | PT Bank vs. Eurobank Ergasias Services | PT Bank vs. Kasikornbank Public Co |
| Salzgitter vs. ArcelorMittal SA | Salzgitter vs. Acerinox SA ADR | Salzgitter vs. Aperam PK | Salzgitter vs. Ferrexpo PLC |
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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