Correlation Between PT Bank and Caterpillar
Can any of the company-specific risk be diversified away by investing in both PT Bank and Caterpillar 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 Caterpillar 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 Caterpillar, you can compare the effects of market volatilities on PT Bank and Caterpillar 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 Caterpillar. Check out your portfolio center. Please also check ongoing floating volatility patterns of PT Bank and Caterpillar.
Diversification Opportunities for PT Bank and Caterpillar
-0.74 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between BYRA and Caterpillar is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding PT Bank Rakyat and Caterpillar in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Caterpillar 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 Caterpillar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Caterpillar has no effect on the direction of PT Bank i.e., PT Bank and Caterpillar go up and down completely randomly.
Pair Corralation between PT Bank and Caterpillar
Assuming the 90 days trading horizon PT Bank Rakyat is expected to under-perform the Caterpillar. In addition to that, PT Bank is 2.34 times more volatile than Caterpillar. It trades about -0.01 of its total potential returns per unit of risk. Caterpillar is currently generating about 0.1 per unit of volatility. If you would invest 21,485 in Caterpillar on September 2, 2024 and sell it today you would earn a total of 17,065 from holding Caterpillar or generate 79.43% 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. Caterpillar
Performance |
| Timeline |
| PT Bank Rakyat |
| Caterpillar |
PT Bank and Caterpillar Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PT Bank and Caterpillar
The main advantage of trading using opposite PT Bank and Caterpillar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PT Bank position performs unexpectedly, Caterpillar 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 Caterpillar will offset losses from the drop in Caterpillar's long position.| PT Bank vs. COMMERCIAL VEHICLE | PT Bank vs. Carsales | PT Bank vs. ADRIATIC METALS LS 013355 | PT Bank vs. Lamar Advertising |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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