Correlation Between PT Bank and Strategic Investments
Can any of the company-specific risk be diversified away by investing in both PT Bank and Strategic Investments 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 Strategic Investments 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 Strategic Investments AS, you can compare the effects of market volatilities on PT Bank and Strategic Investments 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 Strategic Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of PT Bank and Strategic Investments.
Diversification Opportunities for PT Bank and Strategic Investments
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between BOZA and Strategic is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding PT Bank Maybank and Strategic Investments AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Strategic Investments 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 Strategic Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Strategic Investments has no effect on the direction of PT Bank i.e., PT Bank and Strategic Investments go up and down completely randomly.
Pair Corralation between PT Bank and Strategic Investments
Assuming the 90 days trading horizon PT Bank Maybank is expected to generate 2.5 times more return on investment than Strategic Investments. However, PT Bank is 2.5 times more volatile than Strategic Investments AS. It trades about 0.15 of its potential returns per unit of risk. Strategic Investments AS is currently generating about -0.31 per unit of risk. If you would invest 1.25 in PT Bank Maybank on September 20, 2024 and sell it today you would earn a total of 0.20 from holding PT Bank Maybank or generate 16.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
PT Bank Maybank vs. Strategic Investments AS
Performance |
| Timeline |
| PT Bank Maybank |
| Strategic Investments |
PT Bank and Strategic Investments Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PT Bank and Strategic Investments
The main advantage of trading using opposite PT Bank and Strategic Investments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PT Bank position performs unexpectedly, Strategic Investments 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 Strategic Investments will offset losses from the drop in Strategic Investments' long position.| PT Bank vs. ARDAGH METAL PACDL 0001 | PT Bank vs. Alaska Air Group | PT Bank vs. Fair Isaac Corp | PT Bank vs. Westinghouse Air Brake |
| Strategic Investments vs. Ameriprise Financial | Strategic Investments vs. Ares Management Corp | Strategic Investments vs. Superior Plus Corp | Strategic Investments vs. SIVERS SEMICONDUCTORS AB |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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