Correlation Between PT Bank and NKSJ HOLDINGS
Can any of the company-specific risk be diversified away by investing in both PT Bank and NKSJ HOLDINGS 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 NKSJ HOLDINGS 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 NKSJ HOLDINGS, you can compare the effects of market volatilities on PT Bank and NKSJ HOLDINGS 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 NKSJ HOLDINGS. Check out your portfolio center. Please also check ongoing floating volatility patterns of PT Bank and NKSJ HOLDINGS.
Diversification Opportunities for PT Bank and NKSJ HOLDINGS
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between BYRA and NKSJ is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding PT Bank Rakyat and NKSJ HOLDINGS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NKSJ HOLDINGS 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 NKSJ HOLDINGS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NKSJ HOLDINGS has no effect on the direction of PT Bank i.e., PT Bank and NKSJ HOLDINGS go up and down completely randomly.
Pair Corralation between PT Bank and NKSJ HOLDINGS
Assuming the 90 days trading horizon PT Bank Rakyat is expected to under-perform the NKSJ HOLDINGS. But the stock apears to be less risky and, when comparing its historical volatility, PT Bank Rakyat is 1.5 times less risky than NKSJ HOLDINGS. The stock trades about -0.21 of its potential returns per unit of risk. The NKSJ HOLDINGS is currently generating about 0.37 of returns per unit of risk over similar time horizon. If you would invest 1,980 in NKSJ HOLDINGS on September 4, 2024 and sell it today you would earn a total of 600.00 from holding NKSJ HOLDINGS or generate 30.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
PT Bank Rakyat vs. NKSJ HOLDINGS
Performance |
| Timeline |
| PT Bank Rakyat |
| NKSJ HOLDINGS |
PT Bank and NKSJ HOLDINGS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PT Bank and NKSJ HOLDINGS
The main advantage of trading using opposite PT Bank and NKSJ HOLDINGS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PT Bank position performs unexpectedly, NKSJ HOLDINGS 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 NKSJ HOLDINGS will offset losses from the drop in NKSJ HOLDINGS's long position.| PT Bank vs. Hanison Construction Holdings | PT Bank vs. TITAN MACHINERY | PT Bank vs. Australian Agricultural | PT Bank vs. Southwest Airlines Co |
| NKSJ HOLDINGS vs. ANGLER GAMING PLC | NKSJ HOLDINGS vs. Media and Games | NKSJ HOLDINGS vs. Computershare Limited | NKSJ HOLDINGS vs. GAMESTOP |
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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