Correlation Between PT Bank and SENECA FOODS-A
Can any of the company-specific risk be diversified away by investing in both PT Bank and SENECA FOODS-A 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 SENECA FOODS-A 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 SENECA FOODS A, you can compare the effects of market volatilities on PT Bank and SENECA FOODS-A 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 SENECA FOODS-A. Check out your portfolio center. Please also check ongoing floating volatility patterns of PT Bank and SENECA FOODS-A.
Diversification Opportunities for PT Bank and SENECA FOODS-A
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between BYRA and SENECA is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding PT Bank Rakyat and SENECA FOODS A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SENECA FOODS A 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 SENECA FOODS-A. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SENECA FOODS A has no effect on the direction of PT Bank i.e., PT Bank and SENECA FOODS-A go up and down completely randomly.
Pair Corralation between PT Bank and SENECA FOODS-A
Assuming the 90 days trading horizon PT Bank Rakyat is expected to under-perform the SENECA FOODS-A. But the stock apears to be less risky and, when comparing its historical volatility, PT Bank Rakyat is 1.18 times less risky than SENECA FOODS-A. The stock trades about -0.23 of its potential returns per unit of risk. The SENECA FOODS A is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest 5,500 in SENECA FOODS A on August 24, 2024 and sell it today you would earn a total of 900.00 from holding SENECA FOODS A or generate 16.36% 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. SENECA FOODS A
Performance |
| Timeline |
| PT Bank Rakyat |
| SENECA FOODS A |
PT Bank and SENECA FOODS-A Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PT Bank and SENECA FOODS-A
The main advantage of trading using opposite PT Bank and SENECA FOODS-A positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PT Bank position performs unexpectedly, SENECA FOODS-A 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 SENECA FOODS-A will offset losses from the drop in SENECA FOODS-A's long position.| PT Bank vs. Laureate Education | PT Bank vs. BOS BETTER ONLINE | PT Bank vs. G III Apparel Group | PT Bank vs. RYU Apparel |
| SENECA FOODS-A vs. Chunghwa Telecom Co | SENECA FOODS-A vs. ScanSource | SENECA FOODS-A vs. Coor Service Management | SENECA FOODS-A vs. Cogent Communications Holdings |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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