Correlation Between Nishi Nippon and PT Bank
Can any of the company-specific risk be diversified away by investing in both Nishi Nippon 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 Nishi Nippon and PT Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nishi Nippon Railroad Co and PT Bank Maybank, you can compare the effects of market volatilities on Nishi Nippon 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 Nishi Nippon with a short position of PT Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nishi Nippon and PT Bank.
Diversification Opportunities for Nishi Nippon and PT Bank
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Nishi and BOZA is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Nishi Nippon Railroad Co and PT Bank Maybank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PT Bank Maybank and Nishi Nippon 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 Nishi Nippon Railroad Co 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 Maybank has no effect on the direction of Nishi Nippon i.e., Nishi Nippon and PT Bank go up and down completely randomly.
Pair Corralation between Nishi Nippon and PT Bank
Assuming the 90 days horizon Nishi Nippon is expected to generate 1.09 times less return on investment than PT Bank. But when comparing it to its historical volatility, Nishi Nippon Railroad Co is 1.81 times less risky than PT Bank. It trades about 0.03 of its potential returns per unit of risk. PT Bank Maybank is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 1.35 in PT Bank Maybank on August 27, 2024 and sell it today you would lose (0.10) from holding PT Bank Maybank or give up 7.41% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nishi Nippon Railroad Co vs. PT Bank Maybank
Performance |
| Timeline |
| Nishi Nippon Railroad |
| PT Bank Maybank |
Nishi Nippon and PT Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nishi Nippon and PT Bank
The main advantage of trading using opposite Nishi Nippon and PT Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nishi Nippon 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.| Nishi Nippon vs. Westinghouse Air Brake | Nishi Nippon vs. Superior Plus Corp | Nishi Nippon vs. NMI Holdings | Nishi Nippon vs. Origin Agritech |
| PT Bank vs. SCANDMEDICAL SOLDK 040 | PT Bank vs. Compugroup Medical SE | PT Bank vs. Perdoceo Education | PT Bank vs. EMBARK EDUCATION 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 Stocks Directory module to find actively traded stocks across global markets.
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