Correlation Between PT Bank and China Railway
Can any of the company-specific risk be diversified away by investing in both PT Bank and China Railway 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 China Railway 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 China Railway Group, you can compare the effects of market volatilities on PT Bank and China Railway 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 China Railway. Check out your portfolio center. Please also check ongoing floating volatility patterns of PT Bank and China Railway.
Diversification Opportunities for PT Bank and China Railway
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between BYRA and China is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding PT Bank Rakyat and China Railway Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Railway Group 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 China Railway. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Railway Group has no effect on the direction of PT Bank i.e., PT Bank and China Railway go up and down completely randomly.
Pair Corralation between PT Bank and China Railway
Assuming the 90 days trading horizon PT Bank Rakyat is expected to generate 2.74 times more return on investment than China Railway. However, PT Bank is 2.74 times more volatile than China Railway Group. It trades about -0.05 of its potential returns per unit of risk. China Railway Group is currently generating about -0.15 per unit of risk. If you would invest 25.00 in PT Bank Rakyat on September 2, 2024 and sell it today you would lose (2.00) from holding PT Bank Rakyat or give up 8.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
PT Bank Rakyat vs. China Railway Group
Performance |
| Timeline |
| PT Bank Rakyat |
| China Railway Group |
PT Bank and China Railway Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PT Bank and China Railway
The main advantage of trading using opposite PT Bank and China Railway positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PT Bank position performs unexpectedly, China Railway 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 China Railway will offset losses from the drop in China Railway's long position.| PT Bank vs. COMMERCIAL VEHICLE | PT Bank vs. Carsales | PT Bank vs. ADRIATIC METALS LS 013355 | PT Bank vs. Lamar Advertising |
| China Railway vs. Perdoceo Education | China Railway vs. Spirent Communications plc | China Railway vs. Consolidated Communications Holdings | China Railway vs. Sims Metal Management |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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