Correlation Between Laureate Education and PT Bank
Can any of the company-specific risk be diversified away by investing in both Laureate Education 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 Laureate Education and PT Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Laureate Education and PT Bank Rakyat, you can compare the effects of market volatilities on Laureate Education 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 Laureate Education with a short position of PT Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Laureate Education and PT Bank.
Diversification Opportunities for Laureate Education and PT Bank
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Laureate and BYRA is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Laureate Education 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 Laureate Education 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 Laureate Education 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 Laureate Education i.e., Laureate Education and PT Bank go up and down completely randomly.
Pair Corralation between Laureate Education and PT Bank
Assuming the 90 days trading horizon Laureate Education is expected to generate 0.66 times more return on investment than PT Bank. However, Laureate Education is 1.51 times less risky than PT Bank. It trades about 0.4 of its potential returns per unit of risk. PT Bank Rakyat is currently generating about 0.03 per unit of risk. If you would invest 1,400 in Laureate Education on August 28, 2024 and sell it today you would earn a total of 460.00 from holding Laureate Education or generate 32.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Laureate Education vs. PT Bank Rakyat
Performance |
| Timeline |
| Laureate Education |
| PT Bank Rakyat |
Laureate Education and PT Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Laureate Education and PT Bank
The main advantage of trading using opposite Laureate Education and PT Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Laureate Education 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.| Laureate Education vs. GOLD ROAD RES | Laureate Education vs. TITANIUM TRANSPORTGROUP | Laureate Education vs. Nishi Nippon Railroad Co | Laureate Education vs. GRIFFIN MINING LTD |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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