Correlation Between PT Bank and Resona Holdings

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Can any of the company-specific risk be diversified away by investing in both PT Bank and Resona Holdings 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 Resona Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PT Bank Central and Resona Holdings, you can compare the effects of market volatilities on PT Bank and Resona Holdings 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 Resona Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of PT Bank and Resona Holdings.

Diversification Opportunities for PT Bank and Resona Holdings

-0.08
  Correlation Coefficient

Good diversification

The 3 months correlation between BZG2 and Resona is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding PT Bank Central and Resona Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Resona Holdings 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 Central are associated (or correlated) with Resona Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Resona Holdings has no effect on the direction of PT Bank i.e., PT Bank and Resona Holdings go up and down completely randomly.

Pair Corralation between PT Bank and Resona Holdings

Assuming the 90 days trading horizon PT Bank Central is expected to under-perform the Resona Holdings. In addition to that, PT Bank is 3.1 times more volatile than Resona Holdings. It trades about -0.07 of its total potential returns per unit of risk. Resona Holdings is currently generating about 0.48 per unit of volatility. If you would invest  680.00  in Resona Holdings on November 27, 2024 and sell it today you would earn a total of  95.00  from holding Resona Holdings or generate 13.97% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

PT Bank Central  vs.  Resona Holdings

 Performance 
       Timeline  
PT Bank Central 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days PT Bank Central has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's technical and fundamental indicators remain nearly stable which may send shares a bit higher in March 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.
Resona Holdings 

Risk-Adjusted Performance

Weak

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Resona Holdings are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Resona Holdings is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

PT Bank and Resona Holdings Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with PT Bank and Resona Holdings

The main advantage of trading using opposite PT Bank and Resona Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PT Bank position performs unexpectedly, Resona Holdings 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 Resona Holdings will offset losses from the drop in Resona Holdings' long position.
The idea behind PT Bank Central and Resona Holdings 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.
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.

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