Correlation Between CDN IMPERIAL and PT Bank
Can any of the company-specific risk be diversified away by investing in both CDN IMPERIAL and PT Bank 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 CDN IMPERIAL and PT Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CDN IMPERIAL BANK and PT Bank Maybank, you can compare the effects of market volatilities on CDN IMPERIAL and PT Bank 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 CDN IMPERIAL with a short position of PT Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of CDN IMPERIAL and PT Bank.
Diversification Opportunities for CDN IMPERIAL and PT Bank
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between CDN and BOZA is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding CDN IMPERIAL BANK and PT Bank Maybank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PT Bank Maybank and CDN IMPERIAL 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 CDN IMPERIAL BANK are associated (or correlated) with PT Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PT Bank Maybank has no effect on the direction of CDN IMPERIAL i.e., CDN IMPERIAL and PT Bank go up and down completely randomly.
Pair Corralation between CDN IMPERIAL and PT Bank
Assuming the 90 days trading horizon CDN IMPERIAL BANK is expected to generate 0.24 times more return on investment than PT Bank. However, CDN IMPERIAL BANK is 4.2 times less risky than PT Bank. It trades about 0.19 of its potential returns per unit of risk. PT Bank Maybank is currently generating about 0.01 per unit of risk. If you would invest 3,678 in CDN IMPERIAL BANK on September 4, 2024 and sell it today you would earn a total of 2,431 from holding CDN IMPERIAL BANK or generate 66.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CDN IMPERIAL BANK vs. PT Bank Maybank
Performance |
| Timeline |
| CDN IMPERIAL BANK |
| PT Bank Maybank |
CDN IMPERIAL and PT Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CDN IMPERIAL and PT Bank
The main advantage of trading using opposite CDN IMPERIAL and PT Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CDN IMPERIAL position performs unexpectedly, PT Bank 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 PT Bank will offset losses from the drop in PT Bank's long position.| CDN IMPERIAL vs. TOTAL GABON | CDN IMPERIAL vs. Walgreens Boots Alliance | CDN IMPERIAL vs. Peak Resources Limited |
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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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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