Correlation Between PT Bank and METHODE ELECTRONICS
Can any of the company-specific risk be diversified away by investing in both PT Bank and METHODE ELECTRONICS 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 METHODE ELECTRONICS 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 METHODE ELECTRONICS, you can compare the effects of market volatilities on PT Bank and METHODE ELECTRONICS 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 METHODE ELECTRONICS. Check out your portfolio center. Please also check ongoing floating volatility patterns of PT Bank and METHODE ELECTRONICS.
Diversification Opportunities for PT Bank and METHODE ELECTRONICS
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between BYRA and METHODE is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding PT Bank Rakyat and METHODE ELECTRONICS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on METHODE ELECTRONICS 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 METHODE ELECTRONICS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of METHODE ELECTRONICS has no effect on the direction of PT Bank i.e., PT Bank and METHODE ELECTRONICS go up and down completely randomly.
Pair Corralation between PT Bank and METHODE ELECTRONICS
Assuming the 90 days trading horizon PT Bank Rakyat is expected to under-perform the METHODE ELECTRONICS. In addition to that, PT Bank is 1.17 times more volatile than METHODE ELECTRONICS. It trades about -0.08 of its total potential returns per unit of risk. METHODE ELECTRONICS is currently generating about 0.28 per unit of volatility. If you would invest 810.00 in METHODE ELECTRONICS on September 1, 2024 and sell it today you would earn a total of 230.00 from holding METHODE ELECTRONICS or generate 28.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
PT Bank Rakyat vs. METHODE ELECTRONICS
Performance |
| Timeline |
| PT Bank Rakyat |
| METHODE ELECTRONICS |
PT Bank and METHODE ELECTRONICS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PT Bank and METHODE ELECTRONICS
The main advantage of trading using opposite PT Bank and METHODE ELECTRONICS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PT Bank position performs unexpectedly, METHODE ELECTRONICS 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 METHODE ELECTRONICS will offset losses from the drop in METHODE ELECTRONICS'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 |
| METHODE ELECTRONICS vs. SIVERS SEMICONDUCTORS AB | METHODE ELECTRONICS vs. Darden Restaurants | METHODE ELECTRONICS vs. Reliance Steel Aluminum | METHODE ELECTRONICS vs. Q2M Managementberatung AG |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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