Correlation Between PT Bank and CVB Financial
Can any of the company-specific risk be diversified away by investing in both PT Bank and CVB Financial 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 CVB Financial 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 CVB Financial Corp, you can compare the effects of market volatilities on PT Bank and CVB Financial 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 CVB Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of PT Bank and CVB Financial.
Diversification Opportunities for PT Bank and CVB Financial
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between PQ9 and CVB is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding PT Bank Mandiri and CVB Financial Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CVB Financial Corp 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 CVB Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CVB Financial Corp has no effect on the direction of PT Bank i.e., PT Bank and CVB Financial go up and down completely randomly.
Pair Corralation between PT Bank and CVB Financial
Assuming the 90 days horizon PT Bank is expected to generate 2.38 times less return on investment than CVB Financial. In addition to that, PT Bank is 1.84 times more volatile than CVB Financial Corp. It trades about 0.02 of its total potential returns per unit of risk. CVB Financial Corp is currently generating about 0.1 per unit of volatility. If you would invest 1,496 in CVB Financial Corp on November 4, 2024 and sell it today you would earn a total of 454.00 from holding CVB Financial Corp or generate 30.35% 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. CVB Financial Corp
Performance |
| Timeline |
| PT Bank Mandiri |
| CVB Financial Corp |
PT Bank and CVB Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PT Bank and CVB Financial
The main advantage of trading using opposite PT Bank and CVB Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PT Bank position performs unexpectedly, CVB Financial 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 CVB Financial will offset losses from the drop in CVB Financial's long position.| PT Bank vs. Texas Roadhouse | PT Bank vs. Nishi Nippon Railroad Co | PT Bank vs. Motorcar Parts of | PT Bank vs. EVS Broadcast Equipment |
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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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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