Correlation Between Spirent Communications and PT Bank
Can any of the company-specific risk be diversified away by investing in both Spirent Communications and PT Bank 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 Spirent Communications and PT Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Spirent Communications plc and PT Bank Mandiri, you can compare the effects of market volatilities on Spirent Communications and PT Bank 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 Spirent Communications with a short position of PT Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Spirent Communications and PT Bank.
Diversification Opportunities for Spirent Communications and PT Bank
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between Spirent and PQ9 is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Spirent Communications plc and PT Bank Mandiri in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PT Bank Mandiri and Spirent Communications 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 Spirent Communications plc are associated (or correlated) with PT Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PT Bank Mandiri has no effect on the direction of Spirent Communications i.e., Spirent Communications and PT Bank go up and down completely randomly.
Pair Corralation between Spirent Communications and PT Bank
Assuming the 90 days horizon Spirent Communications plc is expected to generate 0.29 times more return on investment than PT Bank. However, Spirent Communications plc is 3.47 times less risky than PT Bank. It trades about 0.16 of its potential returns per unit of risk. PT Bank Mandiri is currently generating about -0.18 per unit of risk. If you would invest 206.00 in Spirent Communications plc on November 28, 2024 and sell it today you would earn a total of 10.00 from holding Spirent Communications plc or generate 4.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Spirent Communications plc vs. PT Bank Mandiri
Performance |
| Timeline |
| Spirent Communications |
| PT Bank Mandiri |
Spirent Communications and PT Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Spirent Communications and PT Bank
The main advantage of trading using opposite Spirent Communications and PT Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Spirent Communications position performs unexpectedly, PT Bank 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 PT Bank will offset losses from the drop in PT Bank's long position.| Spirent Communications vs. GUILD ESPORTS PLC | Spirent Communications vs. TRADEGATE | Spirent Communications vs. SCIENCE IN SPORT | Spirent Communications vs. Transport International Holdings |
| PT Bank vs. New Residential Investment | PT Bank vs. Perseus Mining Limited | PT Bank vs. NORTHISLE PERGOLD INC | PT Bank vs. Coeur Mining |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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