Correlation Between METHODE ELECTRONICS and PT Bank
Can any of the company-specific risk be diversified away by investing in both METHODE ELECTRONICS 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 METHODE ELECTRONICS and PT Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between METHODE ELECTRONICS and PT Bank Rakyat, you can compare the effects of market volatilities on METHODE ELECTRONICS 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 METHODE ELECTRONICS with a short position of PT Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of METHODE ELECTRONICS and PT Bank.
Diversification Opportunities for METHODE ELECTRONICS and PT Bank
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between METHODE and BYRA is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding METHODE ELECTRONICS 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 METHODE ELECTRONICS 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 METHODE ELECTRONICS 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 METHODE ELECTRONICS i.e., METHODE ELECTRONICS and PT Bank go up and down completely randomly.
Pair Corralation between METHODE ELECTRONICS and PT Bank
Assuming the 90 days trading horizon METHODE ELECTRONICS is expected to generate 0.96 times more return on investment than PT Bank. However, METHODE ELECTRONICS is 1.04 times less risky than PT Bank. It trades about 0.0 of its potential returns per unit of risk. PT Bank Rakyat is currently generating about -0.05 per unit of risk. If you would invest 1,026 in METHODE ELECTRONICS on August 29, 2024 and sell it today you would lose (26.00) from holding METHODE ELECTRONICS or give up 2.53% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
METHODE ELECTRONICS vs. PT Bank Rakyat
Performance |
| Timeline |
| METHODE ELECTRONICS |
| PT Bank Rakyat |
METHODE ELECTRONICS and PT Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with METHODE ELECTRONICS and PT Bank
The main advantage of trading using opposite METHODE ELECTRONICS and PT Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if METHODE ELECTRONICS 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.| METHODE ELECTRONICS vs. Apple Inc | METHODE ELECTRONICS vs. Apple Inc | METHODE ELECTRONICS vs. Superior Plus Corp | METHODE ELECTRONICS vs. SIVERS SEMICONDUCTORS AB |
| PT Bank vs. METHODE ELECTRONICS | PT Bank vs. STMICROELECTRONICS | PT Bank vs. AGF Management Limited | PT Bank vs. Nucletron Electronic Aktiengesellschaft |
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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