Correlation Between PT Bank and Heineken Holding
Can any of the company-specific risk be diversified away by investing in both PT Bank and Heineken Holding 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 Heineken Holding 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 Heineken Holding NV, you can compare the effects of market volatilities on PT Bank and Heineken Holding 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 Heineken Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of PT Bank and Heineken Holding.
Diversification Opportunities for PT Bank and Heineken Holding
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between PBCRF and Heineken is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding PT Bank Central and Heineken Holding NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Heineken Holding 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 Heineken Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Heineken Holding has no effect on the direction of PT Bank i.e., PT Bank and Heineken Holding go up and down completely randomly.
Pair Corralation between PT Bank and Heineken Holding
Assuming the 90 days horizon PT Bank Central is expected to generate 1.69 times more return on investment than Heineken Holding. However, PT Bank is 1.69 times more volatile than Heineken Holding NV. It trades about 0.02 of its potential returns per unit of risk. Heineken Holding NV is currently generating about -0.02 per unit of risk. If you would invest 55.00 in PT Bank Central on October 22, 2024 and sell it today you would earn a total of 1.00 from holding PT Bank Central or generate 1.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 87.27% |
| Values | Daily Returns |
PT Bank Central vs. Heineken Holding NV
Performance |
| Timeline |
| PT Bank Central |
| Heineken Holding |
PT Bank and Heineken Holding Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PT Bank and Heineken Holding
The main advantage of trading using opposite PT Bank and Heineken Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PT Bank position performs unexpectedly, Heineken Holding 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 Heineken Holding will offset losses from the drop in Heineken Holding's long position.| PT Bank vs. Commercial International Bank | PT Bank vs. Caixabank SA ADR | PT Bank vs. Bank Rakyat | PT Bank vs. Lloyds Banking Group |
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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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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