Correlation Between PT Bank and Charter Communications
Can any of the company-specific risk be diversified away by investing in both PT Bank and Charter Communications 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 Charter Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PT Bank Maybank and Charter Communications, you can compare the effects of market volatilities on PT Bank and Charter Communications 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 Charter Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of PT Bank and Charter Communications.
Diversification Opportunities for PT Bank and Charter Communications
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between BOZA and Charter is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding PT Bank Maybank and Charter Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Charter Communications 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 Maybank are associated (or correlated) with Charter Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Charter Communications has no effect on the direction of PT Bank i.e., PT Bank and Charter Communications go up and down completely randomly.
Pair Corralation between PT Bank and Charter Communications
Assuming the 90 days trading horizon PT Bank Maybank is expected to generate 1.94 times more return on investment than Charter Communications. However, PT Bank is 1.94 times more volatile than Charter Communications. It trades about 0.02 of its potential returns per unit of risk. Charter Communications is currently generating about 0.01 per unit of risk. If you would invest 1.34 in PT Bank Maybank on September 2, 2024 and sell it today you would lose (0.04) from holding PT Bank Maybank or give up 2.99% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
PT Bank Maybank vs. Charter Communications
Performance |
| Timeline |
| PT Bank Maybank |
| Charter Communications |
PT Bank and Charter Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PT Bank and Charter Communications
The main advantage of trading using opposite PT Bank and Charter Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PT Bank position performs unexpectedly, Charter Communications 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 Charter Communications will offset losses from the drop in Charter Communications' long position.The idea behind PT Bank Maybank and Charter Communications 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.| Charter Communications vs. Amkor Technology | Charter Communications vs. JAPAN AIRLINES | Charter Communications vs. Aegean Airlines SA | Charter Communications vs. AEGEAN AIRLINES |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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