Correlation Between PT Bank and Citic Telecom
Can any of the company-specific risk be diversified away by investing in both PT Bank and Citic Telecom 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 Citic Telecom 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 Citic Telecom International, you can compare the effects of market volatilities on PT Bank and Citic Telecom 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 Citic Telecom. Check out your portfolio center. Please also check ongoing floating volatility patterns of PT Bank and Citic Telecom.
Diversification Opportunities for PT Bank and Citic Telecom
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between PQ9 and Citic is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding PT Bank Mandiri and Citic Telecom International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Citic Telecom Intern 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 Citic Telecom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Citic Telecom Intern has no effect on the direction of PT Bank i.e., PT Bank and Citic Telecom go up and down completely randomly.
Pair Corralation between PT Bank and Citic Telecom
Assuming the 90 days horizon PT Bank is expected to generate 4.05 times less return on investment than Citic Telecom. But when comparing it to its historical volatility, PT Bank Mandiri is 1.81 times less risky than Citic Telecom. It trades about 0.03 of its potential returns per unit of risk. Citic Telecom International is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 11.00 in Citic Telecom International on September 2, 2024 and sell it today you would earn a total of 15.00 from holding Citic Telecom International or generate 136.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
PT Bank Mandiri vs. Citic Telecom International
Performance |
| Timeline |
| PT Bank Mandiri |
| Citic Telecom Intern |
PT Bank and Citic Telecom Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PT Bank and Citic Telecom
The main advantage of trading using opposite PT Bank and Citic Telecom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PT Bank position performs unexpectedly, Citic Telecom 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 Citic Telecom will offset losses from the drop in Citic Telecom's long position.The idea behind PT Bank Mandiri and Citic Telecom International pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Citic Telecom vs. X Fab Silicon | Citic Telecom vs. Silicon Motion Technology | Citic Telecom vs. MACOM Technology Solutions | Citic Telecom vs. Micron Technology |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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