Correlation Between PT Bank and Universal Power
Can any of the company-specific risk be diversified away by investing in both PT Bank and Universal Power 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 Universal Power 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 Universal Power Industry, you can compare the effects of market volatilities on PT Bank and Universal Power 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 Universal Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of PT Bank and Universal Power.
Diversification Opportunities for PT Bank and Universal Power
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between BKRKF and Universal is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding PT Bank Rakyat and Universal Power Industry in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Universal Power Industry 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 Universal Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Universal Power Industry has no effect on the direction of PT Bank i.e., PT Bank and Universal Power go up and down completely randomly.
Pair Corralation between PT Bank and Universal Power
Assuming the 90 days horizon PT Bank Rakyat is expected to under-perform the Universal Power. In addition to that, PT Bank is 5.51 times more volatile than Universal Power Industry. It trades about -0.08 of its total potential returns per unit of risk. Universal Power Industry is currently generating about -0.22 per unit of volatility. If you would invest 0.36 in Universal Power Industry on September 3, 2024 and sell it today you would lose (0.02) from holding Universal Power Industry or give up 5.56% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.24% |
| Values | Daily Returns |
PT Bank Rakyat vs. Universal Power Industry
Performance |
| Timeline |
| PT Bank Rakyat |
| Universal Power Industry |
PT Bank and Universal Power Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PT Bank and Universal Power
The main advantage of trading using opposite PT Bank and Universal Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PT Bank position performs unexpectedly, Universal Power 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 Universal Power will offset losses from the drop in Universal Power'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 |
| Universal Power vs. National Health Scan | Universal Power vs. Protect Pharmaceutical | Universal Power vs. World Oil Group | Universal Power vs. Steel Partners Holdings |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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