Correlation Between PT Bank and T.J. Maxx
Can any of the company-specific risk be diversified away by investing in both PT Bank and T.J. Maxx 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 T.J. Maxx 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 The TJX Companies, you can compare the effects of market volatilities on PT Bank and T.J. Maxx 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 T.J. Maxx. Check out your portfolio center. Please also check ongoing floating volatility patterns of PT Bank and T.J. Maxx.
Diversification Opportunities for PT Bank and T.J. Maxx
Very good diversification
The 3 months correlation between BYRA and T.J. is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding PT Bank Rakyat and The TJX Companies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TJX Companies 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 T.J. Maxx. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TJX Companies has no effect on the direction of PT Bank i.e., PT Bank and T.J. Maxx go up and down completely randomly.
Pair Corralation between PT Bank and T.J. Maxx
Assuming the 90 days trading horizon PT Bank Rakyat is expected to under-perform the T.J. Maxx. In addition to that, PT Bank is 3.36 times more volatile than The TJX Companies. It trades about -0.04 of its total potential returns per unit of risk. The TJX Companies is currently generating about 0.28 per unit of volatility. If you would invest 10,561 in The TJX Companies on August 26, 2024 and sell it today you would earn a total of 1,029 from holding The TJX Companies or generate 9.74% 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. The TJX Companies
Performance |
| Timeline |
| PT Bank Rakyat |
| TJX Companies |
PT Bank and T.J. Maxx Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PT Bank and T.J. Maxx
The main advantage of trading using opposite PT Bank and T.J. Maxx positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PT Bank position performs unexpectedly, T.J. Maxx 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 T.J. Maxx will offset losses from the drop in T.J. Maxx's long position.The idea behind PT Bank Rakyat and The TJX Companies pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| T.J. Maxx vs. Titan Machinery | T.J. Maxx vs. Tower Semiconductor | T.J. Maxx vs. Hitachi Construction Machinery | T.J. Maxx vs. Elmos Semiconductor SE |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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