Correlation Between PT Bank and NexGen Energy
Can any of the company-specific risk be diversified away by investing in both PT Bank and NexGen Energy 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 NexGen Energy 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 NexGen Energy, you can compare the effects of market volatilities on PT Bank and NexGen Energy 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 NexGen Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of PT Bank and NexGen Energy.
Diversification Opportunities for PT Bank and NexGen Energy
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between BYRA and NexGen is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding PT Bank Rakyat and NexGen Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NexGen Energy 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 NexGen Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NexGen Energy has no effect on the direction of PT Bank i.e., PT Bank and NexGen Energy go up and down completely randomly.
Pair Corralation between PT Bank and NexGen Energy
Assuming the 90 days trading horizon PT Bank is expected to generate 17.73 times less return on investment than NexGen Energy. In addition to that, PT Bank is 1.1 times more volatile than NexGen Energy. It trades about 0.01 of its total potential returns per unit of risk. NexGen Energy is currently generating about 0.17 per unit of volatility. If you would invest 526.00 in NexGen Energy on September 12, 2024 and sell it today you would earn a total of 259.00 from holding NexGen Energy or generate 49.24% 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. NexGen Energy
Performance |
| Timeline |
| PT Bank Rakyat |
| NexGen Energy |
PT Bank and NexGen Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PT Bank and NexGen Energy
The main advantage of trading using opposite PT Bank and NexGen Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PT Bank position performs unexpectedly, NexGen Energy 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 NexGen Energy will offset losses from the drop in NexGen Energy's long position.| PT Bank vs. Constellation Software | PT Bank vs. AIR PRODCHEMICALS | PT Bank vs. Mitsui Chemicals | PT Bank vs. PSI Software AG |
| NexGen Energy vs. CyberArk Software | NexGen Energy vs. Magic Software Enterprises | NexGen Energy vs. Quaker Chemical | NexGen Energy vs. Siamgas And Petrochemicals |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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