Correlation Between PT Bank and CNH Industrial
Can any of the company-specific risk be diversified away by investing in both PT Bank and CNH Industrial 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 CNH Industrial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PT Bank Mandiri and CNH Industrial NV, you can compare the effects of market volatilities on PT Bank and CNH Industrial 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 CNH Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of PT Bank and CNH Industrial.
Diversification Opportunities for PT Bank and CNH Industrial
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between PQ9 and CNH is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding PT Bank Mandiri and CNH Industrial NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CNH Industrial NV 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 Mandiri are associated (or correlated) with CNH Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CNH Industrial NV has no effect on the direction of PT Bank i.e., PT Bank and CNH Industrial go up and down completely randomly.
Pair Corralation between PT Bank and CNH Industrial
Assuming the 90 days horizon PT Bank Mandiri is expected to generate 4.34 times more return on investment than CNH Industrial. However, PT Bank is 4.34 times more volatile than CNH Industrial NV. It trades about 0.09 of its potential returns per unit of risk. CNH Industrial NV is currently generating about 0.36 per unit of risk. If you would invest 32.00 in PT Bank Mandiri on October 24, 2024 and sell it today you would earn a total of 2.00 from holding PT Bank Mandiri or generate 6.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 94.44% |
| Values | Daily Returns |
PT Bank Mandiri vs. CNH Industrial NV
Performance |
| Timeline |
| PT Bank Mandiri |
| CNH Industrial NV |
PT Bank and CNH Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PT Bank and CNH Industrial
The main advantage of trading using opposite PT Bank and CNH Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PT Bank position performs unexpectedly, CNH Industrial 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 CNH Industrial will offset losses from the drop in CNH Industrial's long position.| PT Bank vs. Gladstone Investment | PT Bank vs. Corporate Office Properties | PT Bank vs. Scottish Mortgage Investment | PT Bank vs. SLR Investment Corp |
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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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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