Correlation Between PT Bank and ABB
Can any of the company-specific risk be diversified away by investing in both PT Bank and ABB 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 ABB 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 ABB, you can compare the effects of market volatilities on PT Bank and ABB 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 ABB. Check out your portfolio center. Please also check ongoing floating volatility patterns of PT Bank and ABB.
Diversification Opportunities for PT Bank and ABB
Excellent diversification
The 3 months correlation between BYRA and ABB is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding PT Bank Rakyat and ABB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ABB 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 ABB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ABB has no effect on the direction of PT Bank i.e., PT Bank and ABB go up and down completely randomly.
Pair Corralation between PT Bank and ABB
Assuming the 90 days trading horizon PT Bank Rakyat is expected to under-perform the ABB. In addition to that, PT Bank is 2.13 times more volatile than ABB. It trades about -0.01 of its total potential returns per unit of risk. ABB is currently generating about 0.05 per unit of volatility. If you would invest 5,200 in ABB on August 30, 2024 and sell it today you would earn a total of 100.00 from holding ABB or generate 1.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
PT Bank Rakyat vs. ABB
Performance |
| Timeline |
| PT Bank Rakyat |
| ABB |
PT Bank and ABB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PT Bank and ABB
The main advantage of trading using opposite PT Bank and ABB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PT Bank position performs unexpectedly, ABB 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 ABB will offset losses from the drop in ABB's long position.| PT Bank vs. METHODE ELECTRONICS | PT Bank vs. STMICROELECTRONICS | PT Bank vs. AGF Management Limited | PT Bank vs. Nucletron Electronic Aktiengesellschaft |
| ABB vs. Wizz Air Holdings | ABB vs. Altair Engineering | ABB vs. Enter Air SA | ABB vs. Tianjin Capital Environmental |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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