Correlation Between PT Bank and Chongqing Machinery
Can any of the company-specific risk be diversified away by investing in both PT Bank and Chongqing Machinery 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 Chongqing Machinery 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 Chongqing Machinery Electric, you can compare the effects of market volatilities on PT Bank and Chongqing Machinery 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 Chongqing Machinery. Check out your portfolio center. Please also check ongoing floating volatility patterns of PT Bank and Chongqing Machinery.
Diversification Opportunities for PT Bank and Chongqing Machinery
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between BYRA and Chongqing is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding PT Bank Rakyat and Chongqing Machinery Electric in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chongqing Machinery 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 Chongqing Machinery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chongqing Machinery has no effect on the direction of PT Bank i.e., PT Bank and Chongqing Machinery go up and down completely randomly.
Pair Corralation between PT Bank and Chongqing Machinery
Assuming the 90 days trading horizon PT Bank Rakyat is expected to under-perform the Chongqing Machinery. In addition to that, PT Bank is 1.02 times more volatile than Chongqing Machinery Electric. It trades about -0.03 of its total potential returns per unit of risk. Chongqing Machinery Electric is currently generating about 0.07 per unit of volatility. If you would invest 7.60 in Chongqing Machinery Electric on October 20, 2024 and sell it today you would earn a total of 0.80 from holding Chongqing Machinery Electric or generate 10.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
PT Bank Rakyat vs. Chongqing Machinery Electric
Performance |
| Timeline |
| PT Bank Rakyat |
| Chongqing Machinery |
PT Bank and Chongqing Machinery Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PT Bank and Chongqing Machinery
The main advantage of trading using opposite PT Bank and Chongqing Machinery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PT Bank position performs unexpectedly, Chongqing Machinery 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 Chongqing Machinery will offset losses from the drop in Chongqing Machinery's long position.| PT Bank vs. Charter Communications | PT Bank vs. GLG LIFE TECH | PT Bank vs. BioNTech SE | PT Bank vs. Telecom Argentina SA |
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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 CEOs Directory module to screen CEOs from public companies around the world.
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