Correlation Between PT Bank and Metro AG
Can any of the company-specific risk be diversified away by investing in both PT Bank and Metro AG 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 Metro AG 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 Metro AG, you can compare the effects of market volatilities on PT Bank and Metro AG 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 Metro AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of PT Bank and Metro AG.
Diversification Opportunities for PT Bank and Metro AG
Poor diversification
The 3 months correlation between BYRA and Metro is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding PT Bank Rakyat and Metro AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metro AG 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 Metro AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metro AG has no effect on the direction of PT Bank i.e., PT Bank and Metro AG go up and down completely randomly.
Pair Corralation between PT Bank and Metro AG
Assuming the 90 days trading horizon PT Bank Rakyat is expected to generate 2.38 times more return on investment than Metro AG. However, PT Bank is 2.38 times more volatile than Metro AG. It trades about 0.02 of its potential returns per unit of risk. Metro AG is currently generating about -0.04 per unit of risk. If you would invest 23.00 in PT Bank Rakyat on September 1, 2024 and sell it today you would earn a total of 0.00 from holding PT Bank Rakyat or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
PT Bank Rakyat vs. Metro AG
Performance |
| Timeline |
| PT Bank Rakyat |
| Metro AG |
PT Bank and Metro AG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PT Bank and Metro AG
The main advantage of trading using opposite PT Bank and Metro AG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PT Bank position performs unexpectedly, Metro AG 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 Metro AG will offset losses from the drop in Metro AG's long position.| PT Bank vs. SCOTT TECHNOLOGY | PT Bank vs. GEAR4MUSIC LS 10 | PT Bank vs. DXC Technology Co | PT Bank vs. Warner Music Group |
| Metro AG vs. HANOVER INSURANCE | Metro AG vs. Safety Insurance Group | Metro AG vs. LIFENET INSURANCE CO | Metro AG vs. Zurich Insurance Group |
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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