Correlation Between PT Bank and GUOTAI JUNAN
Can any of the company-specific risk be diversified away by investing in both PT Bank and GUOTAI JUNAN 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 GUOTAI JUNAN 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 GUOTAI JUNAN SEC, you can compare the effects of market volatilities on PT Bank and GUOTAI JUNAN 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 GUOTAI JUNAN. Check out your portfolio center. Please also check ongoing floating volatility patterns of PT Bank and GUOTAI JUNAN.
Diversification Opportunities for PT Bank and GUOTAI JUNAN
-0.71 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between BYRA and GUOTAI is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding PT Bank Rakyat and GUOTAI JUNAN SEC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GUOTAI JUNAN SEC 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 GUOTAI JUNAN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GUOTAI JUNAN SEC has no effect on the direction of PT Bank i.e., PT Bank and GUOTAI JUNAN go up and down completely randomly.
Pair Corralation between PT Bank and GUOTAI JUNAN
Assuming the 90 days trading horizon PT Bank Rakyat is expected to under-perform the GUOTAI JUNAN. But the stock apears to be less risky and, when comparing its historical volatility, PT Bank Rakyat is 1.86 times less risky than GUOTAI JUNAN. The stock trades about -0.09 of its potential returns per unit of risk. The GUOTAI JUNAN SEC is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 95.00 in GUOTAI JUNAN SEC on August 26, 2024 and sell it today you would earn a total of 42.00 from holding GUOTAI JUNAN SEC or generate 44.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
PT Bank Rakyat vs. GUOTAI JUNAN SEC
Performance |
| Timeline |
| PT Bank Rakyat |
| GUOTAI JUNAN SEC |
PT Bank and GUOTAI JUNAN Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PT Bank and GUOTAI JUNAN
The main advantage of trading using opposite PT Bank and GUOTAI JUNAN positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PT Bank position performs unexpectedly, GUOTAI JUNAN 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 GUOTAI JUNAN will offset losses from the drop in GUOTAI JUNAN's long position.The idea behind PT Bank Rakyat and GUOTAI JUNAN SEC 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.| GUOTAI JUNAN vs. MeVis Medical Solutions | GUOTAI JUNAN vs. ITALIAN WINE BRANDS | GUOTAI JUNAN vs. SCANDMEDICAL SOLDK 040 | GUOTAI JUNAN vs. United Natural Foods |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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