Correlation Between PT Bank and ITV Plc
Can any of the company-specific risk be diversified away by investing in both PT Bank and ITV Plc 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 ITV Plc 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 ITV plc, you can compare the effects of market volatilities on PT Bank and ITV Plc 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 ITV Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of PT Bank and ITV Plc.
Diversification Opportunities for PT Bank and ITV Plc
Poor diversification
The 3 months correlation between PQ9 and ITV is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding PT Bank Mandiri and ITV plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ITV plc 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 ITV Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ITV plc has no effect on the direction of PT Bank i.e., PT Bank and ITV Plc go up and down completely randomly.
Pair Corralation between PT Bank and ITV Plc
Assuming the 90 days horizon PT Bank Mandiri is expected to under-perform the ITV Plc. But the stock apears to be less risky and, when comparing its historical volatility, PT Bank Mandiri is 1.24 times less risky than ITV Plc. The stock trades about -0.07 of its potential returns per unit of risk. The ITV plc is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest 90.00 in ITV plc on August 29, 2024 and sell it today you would lose (5.00) from holding ITV plc or give up 5.56% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
PT Bank Mandiri vs. ITV plc
Performance |
| Timeline |
| PT Bank Mandiri |
| ITV plc |
PT Bank and ITV Plc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PT Bank and ITV Plc
The main advantage of trading using opposite PT Bank and ITV Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PT Bank position performs unexpectedly, ITV Plc 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 ITV Plc will offset losses from the drop in ITV Plc's long position.| PT Bank vs. Digilife Technologies Limited | PT Bank vs. BANKINTER ADR 2007 | PT Bank vs. Regions Financial | PT Bank vs. Chiba Bank |
| ITV Plc vs. NorAm Drilling AS | ITV Plc vs. Superior Plus Corp | ITV Plc vs. NMI Holdings | ITV Plc vs. Origin Agritech |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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