Correlation Between PT Bank and Element Solutions
Can any of the company-specific risk be diversified away by investing in both PT Bank and Element Solutions 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 Element Solutions 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 Element Solutions, you can compare the effects of market volatilities on PT Bank and Element Solutions 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 Element Solutions. Check out your portfolio center. Please also check ongoing floating volatility patterns of PT Bank and Element Solutions.
Diversification Opportunities for PT Bank and Element Solutions
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between PQ9 and Element is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding PT Bank Mandiri and Element Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Element Solutions 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 Element Solutions. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Element Solutions has no effect on the direction of PT Bank i.e., PT Bank and Element Solutions go up and down completely randomly.
Pair Corralation between PT Bank and Element Solutions
Assuming the 90 days horizon PT Bank Mandiri is expected to under-perform the Element Solutions. In addition to that, PT Bank is 4.14 times more volatile than Element Solutions. It trades about -0.11 of its total potential returns per unit of risk. Element Solutions is currently generating about -0.41 per unit of volatility. If you would invest 2,752 in Element Solutions on September 24, 2024 and sell it today you would lose (312.00) from holding Element Solutions or give up 11.34% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
PT Bank Mandiri vs. Element Solutions
Performance |
| Timeline |
| PT Bank Mandiri |
| Element Solutions |
PT Bank and Element Solutions Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PT Bank and Element Solutions
The main advantage of trading using opposite PT Bank and Element Solutions positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PT Bank position performs unexpectedly, Element Solutions 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 Element Solutions will offset losses from the drop in Element Solutions' long position.| PT Bank vs. China Merchants Bank | PT Bank vs. HDFC Bank Limited | PT Bank vs. ICICI Bank Limited | PT Bank vs. PT Bank Central |
| Element Solutions vs. JD SPORTS FASH | Element Solutions vs. PLAYTIKA HOLDING DL 01 | Element Solutions vs. Live Nation Entertainment | Element Solutions vs. Ubisoft Entertainment SA |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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