Correlation Between PT Bank and Sinopec Oilfield
Can any of the company-specific risk be diversified away by investing in both PT Bank and Sinopec Oilfield 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 Sinopec Oilfield 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 Sinopec Oilfield Service, you can compare the effects of market volatilities on PT Bank and Sinopec Oilfield 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 Sinopec Oilfield. Check out your portfolio center. Please also check ongoing floating volatility patterns of PT Bank and Sinopec Oilfield.
Diversification Opportunities for PT Bank and Sinopec Oilfield
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between BKRKF and Sinopec is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding PT Bank Rakyat and Sinopec Oilfield Service in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sinopec Oilfield Service 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 Sinopec Oilfield. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sinopec Oilfield Service has no effect on the direction of PT Bank i.e., PT Bank and Sinopec Oilfield go up and down completely randomly.
Pair Corralation between PT Bank and Sinopec Oilfield
Assuming the 90 days horizon PT Bank is expected to generate 1.12 times less return on investment than Sinopec Oilfield. But when comparing it to its historical volatility, PT Bank Rakyat is 1.12 times less risky than Sinopec Oilfield. It trades about 0.02 of its potential returns per unit of risk. Sinopec Oilfield Service is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 6.81 in Sinopec Oilfield Service on September 4, 2024 and sell it today you would lose (0.27) from holding Sinopec Oilfield Service or give up 3.96% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 81.78% |
| Values | Daily Returns |
PT Bank Rakyat vs. Sinopec Oilfield Service
Performance |
| Timeline |
| PT Bank Rakyat |
| Sinopec Oilfield Service |
PT Bank and Sinopec Oilfield Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PT Bank and Sinopec Oilfield
The main advantage of trading using opposite PT Bank and Sinopec Oilfield positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PT Bank position performs unexpectedly, Sinopec Oilfield 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 Sinopec Oilfield will offset losses from the drop in Sinopec Oilfield's long position.| PT Bank vs. First Hawaiian | PT Bank vs. Central Pacific Financial | PT Bank vs. Territorial Bancorp | PT Bank vs. Comerica |
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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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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