Correlation Between PT Bank and Paramount Resources
Can any of the company-specific risk be diversified away by investing in both PT Bank and Paramount Resources 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 Paramount Resources 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 Paramount Resources, you can compare the effects of market volatilities on PT Bank and Paramount Resources 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 Paramount Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of PT Bank and Paramount Resources.
Diversification Opportunities for PT Bank and Paramount Resources
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between PBCRF and Paramount is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding PT Bank Central and Paramount Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Paramount Resources 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 Paramount Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Paramount Resources has no effect on the direction of PT Bank i.e., PT Bank and Paramount Resources go up and down completely randomly.
Pair Corralation between PT Bank and Paramount Resources
Assuming the 90 days horizon PT Bank Central is expected to generate 2.62 times more return on investment than Paramount Resources. However, PT Bank is 2.62 times more volatile than Paramount Resources. It trades about 0.04 of its potential returns per unit of risk. Paramount Resources is currently generating about -0.37 per unit of risk. If you would invest 57.00 in PT Bank Central on November 5, 2024 and sell it today you would earn a total of 1.00 from holding PT Bank Central or generate 1.75% 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. Paramount Resources
Performance |
| Timeline |
| PT Bank Central |
| Paramount Resources |
PT Bank and Paramount Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PT Bank and Paramount Resources
The main advantage of trading using opposite PT Bank and Paramount Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PT Bank position performs unexpectedly, Paramount Resources 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 Paramount Resources will offset losses from the drop in Paramount Resources' long position.| PT Bank vs. Banco De Chile | PT Bank vs. Banco Santander Brasil | PT Bank vs. CrossFirst Bankshares | PT Bank vs. Banco Bradesco SA |
| Paramount Resources vs. Gear Energy | Paramount Resources vs. Valeura Energy | Paramount Resources vs. Birchcliff Energy | Paramount Resources vs. Canacol Energy |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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