Correlation Between PT Bank and Ally Financial
Can any of the company-specific risk be diversified away by investing in both PT Bank and Ally Financial 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 Ally Financial 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 Ally Financial, you can compare the effects of market volatilities on PT Bank and Ally Financial 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 Ally Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of PT Bank and Ally Financial.
Diversification Opportunities for PT Bank and Ally Financial
-0.83 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between BYRA and Ally is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding PT Bank Rakyat and Ally Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ally 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 Ally Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ally Financial has no effect on the direction of PT Bank i.e., PT Bank and Ally Financial go up and down completely randomly.
Pair Corralation between PT Bank and Ally Financial
Assuming the 90 days trading horizon PT Bank is expected to generate 1.31 times less return on investment than Ally Financial. In addition to that, PT Bank is 2.36 times more volatile than Ally Financial. It trades about 0.02 of its total potential returns per unit of risk. Ally Financial is currently generating about 0.05 per unit of volatility. If you would invest 2,396 in Ally Financial on September 26, 2024 and sell it today you would earn a total of 937.00 from holding Ally Financial or generate 39.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
PT Bank Rakyat vs. Ally Financial
Performance |
| Timeline |
| PT Bank Rakyat |
| Ally Financial |
PT Bank and Ally Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PT Bank and Ally Financial
The main advantage of trading using opposite PT Bank and Ally Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PT Bank position performs unexpectedly, Ally Financial 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 Ally Financial will offset losses from the drop in Ally Financial's long position.| PT Bank vs. China Merchants Bank | PT Bank vs. HDFC Bank Limited | PT Bank vs. ICICI Bank Limited | PT Bank vs. PT Bank Central |
| Ally Financial vs. Far East Horizon | Ally Financial vs. Walker Dunlop | Ally Financial vs. Paragon Banking Group | Ally Financial vs. Hercules Capital |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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