Correlation Between PT Bank and PSB Holdings
Can any of the company-specific risk be diversified away by investing in both PT Bank and PSB Holdings 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 PSB Holdings 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 PSB Holdings, you can compare the effects of market volatilities on PT Bank and PSB Holdings 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 PSB Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of PT Bank and PSB Holdings.
Diversification Opportunities for PT Bank and PSB Holdings
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between PBCRF and PSB is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding PT Bank Central and PSB Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PSB Holdings 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 PSB Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PSB Holdings has no effect on the direction of PT Bank i.e., PT Bank and PSB Holdings go up and down completely randomly.
Pair Corralation between PT Bank and PSB Holdings
Assuming the 90 days horizon PT Bank is expected to generate 1.4 times less return on investment than PSB Holdings. In addition to that, PT Bank is 2.67 times more volatile than PSB Holdings. It trades about 0.03 of its total potential returns per unit of risk. PSB Holdings is currently generating about 0.1 per unit of volatility. If you would invest 1,923 in PSB Holdings on August 31, 2024 and sell it today you would earn a total of 867.00 from holding PSB Holdings or generate 45.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 78.42% |
| Values | Daily Returns |
PT Bank Central vs. PSB Holdings
Performance |
| Timeline |
| PT Bank Central |
| PSB Holdings |
PT Bank and PSB Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PT Bank and PSB Holdings
The main advantage of trading using opposite PT Bank and PSB Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PT Bank position performs unexpectedly, PSB Holdings 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 PSB Holdings will offset losses from the drop in PSB Holdings' long position.| PT Bank vs. Bank Mandiri Persero | PT Bank vs. Piraeus Bank SA | PT Bank vs. Eurobank Ergasias Services | PT Bank vs. Kasikornbank Public Co |
| PSB Holdings vs. HUMANA INC | PSB Holdings vs. SCOR PK | PSB Holdings vs. Aquagold International | PSB Holdings vs. Thrivent High Yield |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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