Correlation Between PT Bank and Platinum Investment
Can any of the company-specific risk be diversified away by investing in both PT Bank and Platinum Investment 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 Platinum Investment 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 Platinum Investment Management, you can compare the effects of market volatilities on PT Bank and Platinum Investment 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 Platinum Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of PT Bank and Platinum Investment.
Diversification Opportunities for PT Bank and Platinum Investment
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between BZG2 and Platinum is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding PT Bank Central and Platinum Investment Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Platinum Investment 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 Platinum Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Platinum Investment has no effect on the direction of PT Bank i.e., PT Bank and Platinum Investment go up and down completely randomly.
Pair Corralation between PT Bank and Platinum Investment
Assuming the 90 days trading horizon PT Bank Central is expected to generate 2.41 times more return on investment than Platinum Investment. However, PT Bank is 2.41 times more volatile than Platinum Investment Management. It trades about -0.07 of its potential returns per unit of risk. Platinum Investment Management is currently generating about -0.43 per unit of risk. If you would invest 61.00 in PT Bank Central on August 28, 2024 and sell it today you would lose (4.00) from holding PT Bank Central or give up 6.56% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
PT Bank Central vs. Platinum Investment Management
Performance |
| Timeline |
| PT Bank Central |
| Platinum Investment |
PT Bank and Platinum Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PT Bank and Platinum Investment
The main advantage of trading using opposite PT Bank and Platinum Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PT Bank position performs unexpectedly, Platinum Investment 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 Platinum Investment will offset losses from the drop in Platinum Investment's long position.The idea behind PT Bank Central and Platinum Investment Management 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.| Platinum Investment vs. PICKN PAY STORES | Platinum Investment vs. Qurate Retail Series | Platinum Investment vs. Caseys General Stores | Platinum Investment vs. Retail Estates NV |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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