Correlation Between PT Bank and Airbus SE
Can any of the company-specific risk be diversified away by investing in both PT Bank and Airbus SE 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 Airbus SE 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 Airbus SE, you can compare the effects of market volatilities on PT Bank and Airbus SE 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 Airbus SE. Check out your portfolio center. Please also check ongoing floating volatility patterns of PT Bank and Airbus SE.
Diversification Opportunities for PT Bank and Airbus SE
Very good diversification
The 3 months correlation between BYRA and Airbus is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding PT Bank Rakyat and Airbus SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Airbus SE 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 Airbus SE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Airbus SE has no effect on the direction of PT Bank i.e., PT Bank and Airbus SE go up and down completely randomly.
Pair Corralation between PT Bank and Airbus SE
Assuming the 90 days trading horizon PT Bank Rakyat is expected to generate 3.28 times more return on investment than Airbus SE. However, PT Bank is 3.28 times more volatile than Airbus SE. It trades about 0.02 of its potential returns per unit of risk. Airbus SE is currently generating about 0.03 per unit of risk. If you would invest 32.00 in PT Bank Rakyat on August 31, 2024 and sell it today you would lose (7.00) from holding PT Bank Rakyat or give up 21.87% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.74% |
| Values | Daily Returns |
PT Bank Rakyat vs. Airbus SE
Performance |
| Timeline |
| PT Bank Rakyat |
| Airbus SE |
PT Bank and Airbus SE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PT Bank and Airbus SE
The main advantage of trading using opposite PT Bank and Airbus SE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PT Bank position performs unexpectedly, Airbus SE 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 Airbus SE will offset losses from the drop in Airbus SE's long position.The idea behind PT Bank Rakyat and Airbus SE 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.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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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