Correlation Between PT Bank and EON SE
Can any of the company-specific risk be diversified away by investing in both PT Bank and EON SE 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 EON SE 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 EON SE, you can compare the effects of market volatilities on PT Bank and EON SE 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 EON SE. Check out your portfolio center. Please also check ongoing floating volatility patterns of PT Bank and EON SE.
Diversification Opportunities for PT Bank and EON SE
Poor diversification
The 3 months correlation between BYRA and EON is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding PT Bank Rakyat and EON SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EON SE 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 EON SE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EON SE has no effect on the direction of PT Bank i.e., PT Bank and EON SE go up and down completely randomly.
Pair Corralation between PT Bank and EON SE
Assuming the 90 days trading horizon PT Bank Rakyat is expected to under-perform the EON SE. In addition to that, PT Bank is 2.08 times more volatile than EON SE. It trades about -0.2 of its total potential returns per unit of risk. EON SE is currently generating about -0.08 per unit of volatility. If you would invest 1,244 in EON SE on September 1, 2024 and sell it today you would lose (28.00) from holding EON SE or give up 2.25% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
PT Bank Rakyat vs. EON SE
Performance |
| Timeline |
| PT Bank Rakyat |
| EON SE |
PT Bank and EON SE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PT Bank and EON SE
The main advantage of trading using opposite PT Bank and EON SE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PT Bank position performs unexpectedly, EON SE 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 EON SE will offset losses from the drop in EON SE's long position.The idea behind PT Bank Rakyat and EON SE 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.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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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