Correlation Between PT Bank and Abbott Laboratories
Can any of the company-specific risk be diversified away by investing in both PT Bank and Abbott Laboratories 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 Abbott Laboratories 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 Abbott Laboratories, you can compare the effects of market volatilities on PT Bank and Abbott Laboratories 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 Abbott Laboratories. Check out your portfolio center. Please also check ongoing floating volatility patterns of PT Bank and Abbott Laboratories.
Diversification Opportunities for PT Bank and Abbott Laboratories
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between BYRA and Abbott is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding PT Bank Rakyat and Abbott Laboratories in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Abbott Laboratories 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 Abbott Laboratories. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Abbott Laboratories has no effect on the direction of PT Bank i.e., PT Bank and Abbott Laboratories go up and down completely randomly.
Pair Corralation between PT Bank and Abbott Laboratories
Assuming the 90 days trading horizon PT Bank Rakyat is expected to under-perform the Abbott Laboratories. In addition to that, PT Bank is 1.8 times more volatile than Abbott Laboratories. It trades about -0.2 of its total potential returns per unit of risk. Abbott Laboratories is currently generating about 0.22 per unit of volatility. If you would invest 10,560 in Abbott Laboratories on August 29, 2024 and sell it today you would earn a total of 662.00 from holding Abbott Laboratories or generate 6.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
PT Bank Rakyat vs. Abbott Laboratories
Performance |
| Timeline |
| PT Bank Rakyat |
| Abbott Laboratories |
PT Bank and Abbott Laboratories Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PT Bank and Abbott Laboratories
The main advantage of trading using opposite PT Bank and Abbott Laboratories positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PT Bank position performs unexpectedly, Abbott Laboratories 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 Abbott Laboratories will offset losses from the drop in Abbott Laboratories' long position.The idea behind PT Bank Rakyat and Abbott Laboratories 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.| Abbott Laboratories vs. Superior Plus Corp | Abbott Laboratories vs. NMI Holdings | Abbott Laboratories vs. Origin Agritech | Abbott Laboratories 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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