Correlation Between PT Bank and Toray Industries

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Can any of the company-specific risk be diversified away by investing in both PT Bank and Toray Industries 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 Toray Industries 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 Toray Industries, you can compare the effects of market volatilities on PT Bank and Toray Industries 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 Toray Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of PT Bank and Toray Industries.

Diversification Opportunities for PT Bank and Toray Industries

BKRKFTorayDiversified AwayBKRKFTorayDiversified Away100%
-0.45
  Correlation Coefficient

Very good diversification

The 3 months correlation between BKRKF and Toray is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding PT Bank Rakyat and Toray Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Toray Industries 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 Toray Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Toray Industries has no effect on the direction of PT Bank i.e., PT Bank and Toray Industries go up and down completely randomly.

Pair Corralation between PT Bank and Toray Industries

Assuming the 90 days horizon PT Bank Rakyat is expected to generate 8.55 times more return on investment than Toray Industries. However, PT Bank is 8.55 times more volatile than Toray Industries. It trades about 0.04 of its potential returns per unit of risk. Toray Industries is currently generating about 0.14 per unit of risk. If you would invest  24.00  in PT Bank Rakyat on November 26, 2024 and sell it today you would lose (1.00) from holding PT Bank Rakyat or give up 4.17% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy88.0%
ValuesDaily Returns

PT Bank Rakyat  vs.  Toray Industries

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -30-20-100102030
JavaScript chart by amCharts 3.21.15BKRKF TRYIF
       Timeline  
PT Bank Rakyat 

Risk-Adjusted Performance

Insignificant

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in PT Bank Rakyat are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile forward-looking signals, PT Bank reported solid returns over the last few months and may actually be approaching a breakup point.
JavaScript chart by amCharts 3.21.15NovDecJanFebDecJanFeb0.20.220.240.260.280.3
Toray Industries 

Risk-Adjusted Performance

OK

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Toray Industries are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly inconsistent forward indicators, Toray Industries may actually be approaching a critical reversion point that can send shares even higher in March 2025.
JavaScript chart by amCharts 3.21.15MayJulNovJanJulNovJan4.555.566.5

PT Bank and Toray Industries Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-31.34-23.47-15.6-7.740.137.9615.9223.8831.84 0.0050.0100.0150.020
JavaScript chart by amCharts 3.21.15BKRKF TRYIF
       Returns  

Pair Trading with PT Bank and Toray Industries

The main advantage of trading using opposite PT Bank and Toray Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PT Bank position performs unexpectedly, Toray Industries 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 Toray Industries will offset losses from the drop in Toray Industries' long position.
The idea behind PT Bank Rakyat and Toray Industries 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.
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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 CEOs Directory module to screen CEOs from public companies around the world.

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