Correlation Between Central Pacific and PT Bank
Can any of the company-specific risk be diversified away by investing in both Central Pacific 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 Central Pacific and PT Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Central Pacific Financial and PT Bank Rakyat, you can compare the effects of market volatilities on Central Pacific 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 Central Pacific with a short position of PT Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Central Pacific and PT Bank.
Diversification Opportunities for Central Pacific and PT Bank
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Central and BKRKF is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Central Pacific Financial 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 Central Pacific 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 Central Pacific Financial 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 Central Pacific i.e., Central Pacific and PT Bank go up and down completely randomly.
Pair Corralation between Central Pacific and PT Bank
Considering the 90-day investment horizon Central Pacific Financial is expected to under-perform the PT Bank. But the stock apears to be less risky and, when comparing its historical volatility, Central Pacific Financial is 5.99 times less risky than PT Bank. The stock trades about -0.07 of its potential returns per unit of risk. The PT Bank Rakyat is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 28.00 in PT Bank Rakyat on September 12, 2024 and sell it today you would earn a total of 1.00 from holding PT Bank Rakyat or generate 3.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Central Pacific Financial vs. PT Bank Rakyat
Performance |
| Timeline |
| Central Pacific Financial |
| PT Bank Rakyat |
Central Pacific and PT Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Central Pacific and PT Bank
The main advantage of trading using opposite Central Pacific and PT Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Central Pacific 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.| Central Pacific vs. Bank of Hawaii | Central Pacific vs. Territorial Bancorp | Central Pacific vs. First Bancorp | Central Pacific vs. Hancock Whitney Corp |
| PT Bank vs. Morningstar Unconstrained Allocation | PT Bank vs. Bondbloxx ETF Trust | PT Bank vs. Spring Valley Acquisition | PT Bank vs. Bondbloxx ETF Trust |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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