Correlation Between Cars and PT Bank
Can any of the company-specific risk be diversified away by investing in both Cars 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 Cars and PT Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cars Inc and PT Bank Rakyat, you can compare the effects of market volatilities on Cars 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 Cars with a short position of PT Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cars and PT Bank.
Diversification Opportunities for Cars and PT Bank
Very good diversification
The 3 months correlation between Cars and BYRA is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Cars Inc and PT Bank Rakyat in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PT Bank Rakyat and Cars 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 Cars Inc 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 Rakyat has no effect on the direction of Cars i.e., Cars and PT Bank go up and down completely randomly.
Pair Corralation between Cars and PT Bank
Assuming the 90 days horizon Cars Inc is expected to generate 0.68 times more return on investment than PT Bank. However, Cars Inc is 1.47 times less risky than PT Bank. It trades about 0.04 of its potential returns per unit of risk. PT Bank Rakyat is currently generating about 0.02 per unit of risk. If you would invest 1,330 in Cars Inc on September 5, 2024 and sell it today you would earn a total of 550.00 from holding Cars Inc or generate 41.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Cars Inc vs. PT Bank Rakyat
Performance |
| Timeline |
| Cars Inc |
| PT Bank Rakyat |
Cars and PT Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cars and PT Bank
The main advantage of trading using opposite Cars and PT Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cars 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.| Cars vs. LG Display Co | Cars vs. Ameriprise Financial | Cars vs. SK TELECOM TDADR | Cars vs. OAKTRSPECLENDNEW |
| PT Bank vs. Hyatt Hotels | PT Bank vs. Fukuyama Transporting Co | PT Bank vs. Big 5 Sporting | PT Bank vs. Sunstone Hotel Investors |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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