Correlation Between PT Bank and National Storage
Can any of the company-specific risk be diversified away by investing in both PT Bank and National Storage 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 National Storage 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 National Storage Affiliates, you can compare the effects of market volatilities on PT Bank and National Storage 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 National Storage. Check out your portfolio center. Please also check ongoing floating volatility patterns of PT Bank and National Storage.
Diversification Opportunities for PT Bank and National Storage
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between BYRA and National is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding PT Bank Rakyat and National Storage Affiliates in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Storage Aff 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 National Storage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Storage Aff has no effect on the direction of PT Bank i.e., PT Bank and National Storage go up and down completely randomly.
Pair Corralation between PT Bank and National Storage
Assuming the 90 days trading horizon PT Bank Rakyat is expected to under-perform the National Storage. In addition to that, PT Bank is 2.08 times more volatile than National Storage Affiliates. It trades about -0.02 of its total potential returns per unit of risk. National Storage Affiliates is currently generating about 0.04 per unit of volatility. If you would invest 4,055 in National Storage Affiliates on August 28, 2024 and sell it today you would earn a total of 134.00 from holding National Storage Affiliates or generate 3.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 98.46% |
| Values | Daily Returns |
PT Bank Rakyat vs. National Storage Affiliates
Performance |
| Timeline |
| PT Bank Rakyat |
| National Storage Aff |
PT Bank and National Storage Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PT Bank and National Storage
The main advantage of trading using opposite PT Bank and National Storage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PT Bank position performs unexpectedly, National Storage 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 National Storage will offset losses from the drop in National Storage's long position.The idea behind PT Bank Rakyat and National Storage Affiliates 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.| National Storage vs. Superior Plus Corp | National Storage vs. Origin Agritech | National Storage vs. Identiv | National Storage vs. INTUITIVE SURGICAL |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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