Correlation Between First Horizon and PT Bank
Can any of the company-specific risk be diversified away by investing in both First Horizon 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 First Horizon and PT Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Horizon and PT Bank Central, you can compare the effects of market volatilities on First Horizon 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 First Horizon with a short position of PT Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Horizon and PT Bank.
Diversification Opportunities for First Horizon and PT Bank
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between First and PBCRF is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding First Horizon and PT Bank Central in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PT Bank Central and First Horizon 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 First Horizon 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 Central has no effect on the direction of First Horizon i.e., First Horizon and PT Bank go up and down completely randomly.
Pair Corralation between First Horizon and PT Bank
Assuming the 90 days trading horizon First Horizon is expected to generate 0.25 times more return on investment than PT Bank. However, First Horizon is 3.93 times less risky than PT Bank. It trades about 0.12 of its potential returns per unit of risk. PT Bank Central is currently generating about 0.02 per unit of risk. If you would invest 1,630 in First Horizon on August 30, 2024 and sell it today you would earn a total of 900.00 from holding First Horizon or generate 55.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 97.97% |
| Values | Daily Returns |
First Horizon vs. PT Bank Central
Performance |
| Timeline |
| First Horizon |
| PT Bank Central |
First Horizon and PT Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Horizon and PT Bank
The main advantage of trading using opposite First Horizon and PT Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Horizon 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.| First Horizon vs. Nuvalent | First Horizon vs. Flexible Solutions International | First Horizon vs. Valneva SE ADR | First Horizon vs. GMS Inc |
| PT Bank vs. Commercial International Bank | PT Bank vs. Caixabank SA ADR | PT Bank vs. Bank Rakyat | PT Bank vs. Lloyds Banking Group |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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