Correlation Between PT Bank and Capitol Federal

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Can any of the company-specific risk be diversified away by investing in both PT Bank and Capitol Federal 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 Capitol Federal 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 Capitol Federal Financial, you can compare the effects of market volatilities on PT Bank and Capitol Federal 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 Capitol Federal. Check out your portfolio center. Please also check ongoing floating volatility patterns of PT Bank and Capitol Federal.

Diversification Opportunities for PT Bank and Capitol Federal

-0.77
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between BYRA and Capitol is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding PT Bank Rakyat and Capitol Federal Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capitol Federal Financial 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 Capitol Federal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capitol Federal Financial has no effect on the direction of PT Bank i.e., PT Bank and Capitol Federal go up and down completely randomly.

Pair Corralation between PT Bank and Capitol Federal

Assuming the 90 days trading horizon PT Bank is expected to generate 1.94 times less return on investment than Capitol Federal. In addition to that, PT Bank is 2.02 times more volatile than Capitol Federal Financial. It trades about 0.03 of its total potential returns per unit of risk. Capitol Federal Financial is currently generating about 0.11 per unit of volatility. If you would invest  435.00  in Capitol Federal Financial on September 5, 2024 and sell it today you would earn a total of  190.00  from holding Capitol Federal Financial or generate 43.68% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

PT Bank Rakyat  vs.  Capitol Federal Financial

 Performance 
       Timeline  
PT Bank Rakyat 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days PT Bank Rakyat has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.
Capitol Federal Financial 

Risk-Adjusted Performance

9 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Capitol Federal Financial are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Capitol Federal reported solid returns over the last few months and may actually be approaching a breakup point.

PT Bank and Capitol Federal Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with PT Bank and Capitol Federal

The main advantage of trading using opposite PT Bank and Capitol Federal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PT Bank position performs unexpectedly, Capitol Federal 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 Capitol Federal will offset losses from the drop in Capitol Federal's long position.
The idea behind PT Bank Rakyat and Capitol Federal Financial 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.
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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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.

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