Correlation Between PT Bank and Worlds
Can any of the company-specific risk be diversified away by investing in both PT Bank and Worlds 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 Worlds 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 Worlds Inc, you can compare the effects of market volatilities on PT Bank and Worlds 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 Worlds. Check out your portfolio center. Please also check ongoing floating volatility patterns of PT Bank and Worlds.
Diversification Opportunities for PT Bank and Worlds
Good diversification
The 3 months correlation between BKRKF and Worlds is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding PT Bank Rakyat and Worlds Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Worlds Inc 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 Worlds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Worlds Inc has no effect on the direction of PT Bank i.e., PT Bank and Worlds go up and down completely randomly.
Pair Corralation between PT Bank and Worlds
Assuming the 90 days horizon PT Bank Rakyat is expected to generate 0.58 times more return on investment than Worlds. However, PT Bank Rakyat is 1.72 times less risky than Worlds. It trades about -0.02 of its potential returns per unit of risk. Worlds Inc is currently generating about -0.03 per unit of risk. If you would invest 23.00 in PT Bank Rakyat on January 9, 2025 and sell it today you would lose (2.00) from holding PT Bank Rakyat or give up 8.7% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
PT Bank Rakyat vs. Worlds Inc
Performance |
| Timeline |
| PT Bank Rakyat |
| Worlds Inc |
PT Bank and Worlds Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PT Bank and Worlds
The main advantage of trading using opposite PT Bank and Worlds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PT Bank position performs unexpectedly, Worlds 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 Worlds will offset losses from the drop in Worlds' long position.| PT Bank vs. Banco Bradesco SA | PT Bank vs. Itau Unibanco Banco | PT Bank vs. Lloyds Banking Group | PT Bank vs. Deutsche Bank AG |
| Worlds vs. RenoWorks Software | Worlds vs. 01 Communique Laboratory | Worlds vs. RESAAS Services | Worlds vs. LifeSpeak |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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