Correlation Between PT Bank and Edison International
Can any of the company-specific risk be diversified away by investing in both PT Bank and Edison International 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 Edison International 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 Edison International, you can compare the effects of market volatilities on PT Bank and Edison International 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 Edison International. Check out your portfolio center. Please also check ongoing floating volatility patterns of PT Bank and Edison International.
Diversification Opportunities for PT Bank and Edison International
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between BYRA and Edison is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding PT Bank Rakyat and Edison International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Edison International 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 Edison International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Edison International has no effect on the direction of PT Bank i.e., PT Bank and Edison International go up and down completely randomly.
Pair Corralation between PT Bank and Edison International
Assuming the 90 days trading horizon PT Bank Rakyat is expected to generate 4.54 times more return on investment than Edison International. However, PT Bank is 4.54 times more volatile than Edison International. It trades about 0.02 of its potential returns per unit of risk. Edison International is currently generating about 0.06 per unit of risk. If you would invest 29.00 in PT Bank Rakyat on August 31, 2024 and sell it today you would lose (4.00) from holding PT Bank Rakyat or give up 13.79% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.75% |
| Values | Daily Returns |
PT Bank Rakyat vs. Edison International
Performance |
| Timeline |
| PT Bank Rakyat |
| Edison International |
PT Bank and Edison International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PT Bank and Edison International
The main advantage of trading using opposite PT Bank and Edison International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PT Bank position performs unexpectedly, Edison International 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 Edison International will offset losses from the drop in Edison International's long position.| PT Bank vs. China Merchants Bank | PT Bank vs. PT Bank Central | PT Bank vs. State Bank of | PT Bank vs. Mizuho Financial Group |
| Edison International vs. Waste Management | Edison International vs. Western Copper and | Edison International vs. SERI INDUSTRIAL EO | Edison International vs. Q2M Managementberatung AG |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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