Correlation Between PT Bank and Neffs Bancorp
Can any of the company-specific risk be diversified away by investing in both PT Bank and Neffs Bancorp 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 Neffs Bancorp 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 Neffs Bancorp, you can compare the effects of market volatilities on PT Bank and Neffs Bancorp 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 Neffs Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of PT Bank and Neffs Bancorp.
Diversification Opportunities for PT Bank and Neffs Bancorp
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between PBCRF and Neffs is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding PT Bank Central and Neffs Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Neffs Bancorp 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 Neffs Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Neffs Bancorp has no effect on the direction of PT Bank i.e., PT Bank and Neffs Bancorp go up and down completely randomly.
Pair Corralation between PT Bank and Neffs Bancorp
Assuming the 90 days horizon PT Bank is expected to generate 15.74 times less return on investment than Neffs Bancorp. But when comparing it to its historical volatility, PT Bank Central is 1.71 times less risky than Neffs Bancorp. It trades about 0.02 of its potential returns per unit of risk. Neffs Bancorp is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 18,700 in Neffs Bancorp on August 30, 2024 and sell it today you would earn a total of 9,300 from holding Neffs Bancorp or generate 49.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
PT Bank Central vs. Neffs Bancorp
Performance |
| Timeline |
| PT Bank Central |
| Neffs Bancorp |
PT Bank and Neffs Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PT Bank and Neffs Bancorp
The main advantage of trading using opposite PT Bank and Neffs Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PT Bank position performs unexpectedly, Neffs Bancorp 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 Neffs Bancorp will offset losses from the drop in Neffs Bancorp'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 |
| Neffs Bancorp vs. Pioneer Bankcorp | Neffs Bancorp vs. Liberty Northwest Bancorp | Neffs Bancorp vs. First Community | Neffs Bancorp vs. Coeur dAlene Bancorp |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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