Correlation Between PT Bank and Territorial Bancorp

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Can any of the company-specific risk be diversified away by investing in both PT Bank and Territorial Bancorp 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 Territorial Bancorp 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 Territorial Bancorp, you can compare the effects of market volatilities on PT Bank and Territorial Bancorp 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 Territorial Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of PT Bank and Territorial Bancorp.

Diversification Opportunities for PT Bank and Territorial Bancorp

-0.68
  Correlation Coefficient

Excellent diversification

The 3 months correlation between BYRA and Territorial is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding PT Bank Rakyat and Territorial Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Territorial Bancorp 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 Territorial Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Territorial Bancorp has no effect on the direction of PT Bank i.e., PT Bank and Territorial Bancorp go up and down completely randomly.

Pair Corralation between PT Bank and Territorial Bancorp

Assuming the 90 days trading horizon PT Bank is expected to generate 2.39 times less return on investment than Territorial Bancorp. In addition to that, PT Bank is 1.9 times more volatile than Territorial Bancorp. It trades about 0.01 of its total potential returns per unit of risk. Territorial Bancorp is currently generating about 0.03 per unit of volatility. If you would invest  887.00  in Territorial Bancorp on September 5, 2024 and sell it today you would earn a total of  113.00  from holding Territorial Bancorp or generate 12.74% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

PT Bank Rakyat  vs.  Territorial Bancorp

 Performance 
       Timeline  
PT Bank Rakyat 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days PT Bank Rakyat has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.
Territorial Bancorp 

Risk-Adjusted Performance

8 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Territorial Bancorp are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Territorial Bancorp reported solid returns over the last few months and may actually be approaching a breakup point.

PT Bank and Territorial Bancorp Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with PT Bank and Territorial Bancorp

The main advantage of trading using opposite PT Bank and Territorial Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PT Bank position performs unexpectedly, Territorial Bancorp 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 Territorial Bancorp will offset losses from the drop in Territorial Bancorp's long position.
The idea behind PT Bank Rakyat and Territorial Bancorp 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.
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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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.

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