Correlation Between PT Bank and Commercial International
Can any of the company-specific risk be diversified away by investing in both PT Bank and Commercial International 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 PT Bank and Commercial International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PT Bank Central and Commercial International Bank, you can compare the effects of market volatilities on PT Bank and Commercial International 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 PT Bank with a short position of Commercial International. Check out your portfolio center. Please also check ongoing floating volatility patterns of PT Bank and Commercial International.
Diversification Opportunities for PT Bank and Commercial International
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between PBCRF and Commercial is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding PT Bank Central and Commercial International Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Commercial International and PT Bank 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 PT Bank Central are associated (or correlated) with Commercial International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Commercial International has no effect on the direction of PT Bank i.e., PT Bank and Commercial International go up and down completely randomly.
Pair Corralation between PT Bank and Commercial International
Assuming the 90 days horizon PT Bank Central is expected to under-perform the Commercial International. In addition to that, PT Bank is 2.78 times more volatile than Commercial International Bank. It trades about -0.06 of its total potential returns per unit of risk. Commercial International Bank is currently generating about 0.11 per unit of volatility. If you would invest 144.00 in Commercial International Bank on November 22, 2024 and sell it today you would earn a total of 5.00 from holding Commercial International Bank or generate 3.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
PT Bank Central vs. Commercial International Bank
Performance |
| Timeline |
| PT Bank Central |
| Commercial International |
PT Bank and Commercial International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PT Bank and Commercial International
The main advantage of trading using opposite PT Bank and Commercial International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PT Bank position performs unexpectedly, Commercial International 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 Commercial International will offset losses from the drop in Commercial International's long position.| PT Bank vs. Banco Bradesco SA | PT Bank vs. Itau Unibanco Banco | PT Bank vs. Lloyds Banking Group | PT Bank vs. Deutsche Bank AG |
| Commercial International vs. Bank Mandiri Persero | Commercial International vs. Turkiye Garanti Bankasi | Commercial International vs. BOC Hong Kong | Commercial International vs. Hang Seng Bank |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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