Correlation Between PT Bank and Morgan Stanley
Can any of the company-specific risk be diversified away by investing in both PT Bank and Morgan Stanley 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 Morgan Stanley 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 Morgan Stanley, you can compare the effects of market volatilities on PT Bank and Morgan Stanley 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 Morgan Stanley. Check out your portfolio center. Please also check ongoing floating volatility patterns of PT Bank and Morgan Stanley.
Diversification Opportunities for PT Bank and Morgan Stanley
-0.68 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between BYRA and Morgan is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding PT Bank Rakyat and Morgan Stanley in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Morgan Stanley 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 Morgan Stanley. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Morgan Stanley has no effect on the direction of PT Bank i.e., PT Bank and Morgan Stanley go up and down completely randomly.
Pair Corralation between PT Bank and Morgan Stanley
Assuming the 90 days trading horizon PT Bank is expected to generate 3.5 times less return on investment than Morgan Stanley. In addition to that, PT Bank is 3.13 times more volatile than Morgan Stanley. It trades about 0.01 of its total potential returns per unit of risk. Morgan Stanley is currently generating about 0.12 per unit of volatility. If you would invest 7,854 in Morgan Stanley on August 29, 2024 and sell it today you would earn a total of 4,660 from holding Morgan Stanley or generate 59.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.53% |
| Values | Daily Returns |
PT Bank Rakyat vs. Morgan Stanley
Performance |
| Timeline |
| PT Bank Rakyat |
| Morgan Stanley |
PT Bank and Morgan Stanley Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PT Bank and Morgan Stanley
The main advantage of trading using opposite PT Bank and Morgan Stanley positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PT Bank position performs unexpectedly, Morgan Stanley 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 Morgan Stanley will offset losses from the drop in Morgan Stanley's long position.| PT Bank vs. UNIVMUSIC GRPADR050 | PT Bank vs. VIVA WINE GROUP | PT Bank vs. ITALIAN WINE BRANDS | PT Bank vs. UNIVERSAL MUSIC GROUP |
| Morgan Stanley vs. Tower Semiconductor | Morgan Stanley vs. USWE SPORTS AB | Morgan Stanley vs. Fukuyama Transporting Co | Morgan Stanley vs. Transport International Holdings |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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