Correlation Between PT Bank and Fast Retailing
Can any of the company-specific risk be diversified away by investing in both PT Bank and Fast Retailing 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 Fast Retailing 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 Fast Retailing Co, you can compare the effects of market volatilities on PT Bank and Fast Retailing 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 Fast Retailing. Check out your portfolio center. Please also check ongoing floating volatility patterns of PT Bank and Fast Retailing.
Diversification Opportunities for PT Bank and Fast Retailing
-0.19 | Correlation Coefficient |
Good diversification
The 3 months correlation between BYRA and Fast is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding PT Bank Rakyat and Fast Retailing Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fast Retailing 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 Fast Retailing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fast Retailing has no effect on the direction of PT Bank i.e., PT Bank and Fast Retailing go up and down completely randomly.
Pair Corralation between PT Bank and Fast Retailing
Assuming the 90 days trading horizon PT Bank is expected to generate 2.21 times less return on investment than Fast Retailing. In addition to that, PT Bank is 3.1 times more volatile than Fast Retailing Co. It trades about 0.02 of its total potential returns per unit of risk. Fast Retailing Co is currently generating about 0.13 per unit of volatility. If you would invest 23,660 in Fast Retailing Co on September 3, 2024 and sell it today you would earn a total of 7,890 from holding Fast Retailing Co or generate 33.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
PT Bank Rakyat vs. Fast Retailing Co
Performance |
| Timeline |
| PT Bank Rakyat |
| Fast Retailing |
PT Bank and Fast Retailing Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PT Bank and Fast Retailing
The main advantage of trading using opposite PT Bank and Fast Retailing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PT Bank position performs unexpectedly, Fast Retailing 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 Fast Retailing will offset losses from the drop in Fast Retailing's long position.| PT Bank vs. Grand Canyon Education | PT Bank vs. Federal Agricultural Mortgage | PT Bank vs. DAIRY FARM INTL | PT Bank vs. WIMFARM SA EO |
| Fast Retailing vs. TOTAL GABON | Fast Retailing vs. Walgreens Boots Alliance | Fast Retailing vs. Peak Resources Limited |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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