Correlation Between Pakuwon Jati and Bank Pembangunan
Can any of the company-specific risk be diversified away by investing in both Pakuwon Jati and Bank Pembangunan 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 Pakuwon Jati and Bank Pembangunan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pakuwon Jati Tbk and Bank Pembangunan Timur, you can compare the effects of market volatilities on Pakuwon Jati and Bank Pembangunan 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 Pakuwon Jati with a short position of Bank Pembangunan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pakuwon Jati and Bank Pembangunan.
Diversification Opportunities for Pakuwon Jati and Bank Pembangunan
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Pakuwon and Bank is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Pakuwon Jati Tbk and Bank Pembangunan Timur in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank Pembangunan Timur and Pakuwon Jati 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 Pakuwon Jati Tbk are associated (or correlated) with Bank Pembangunan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank Pembangunan Timur has no effect on the direction of Pakuwon Jati i.e., Pakuwon Jati and Bank Pembangunan go up and down completely randomly.
Pair Corralation between Pakuwon Jati and Bank Pembangunan
Assuming the 90 days trading horizon Pakuwon Jati Tbk is expected to under-perform the Bank Pembangunan. In addition to that, Pakuwon Jati is 3.05 times more volatile than Bank Pembangunan Timur. It trades about -0.21 of its total potential returns per unit of risk. Bank Pembangunan Timur is currently generating about -0.24 per unit of volatility. If you would invest 56,500 in Bank Pembangunan Timur on August 25, 2024 and sell it today you would lose (2,000) from holding Bank Pembangunan Timur or give up 3.54% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pakuwon Jati Tbk vs. Bank Pembangunan Timur
Performance |
| Timeline |
| Pakuwon Jati Tbk |
| Bank Pembangunan Timur |
Pakuwon Jati and Bank Pembangunan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pakuwon Jati and Bank Pembangunan
The main advantage of trading using opposite Pakuwon Jati and Bank Pembangunan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pakuwon Jati position performs unexpectedly, Bank Pembangunan 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 Bank Pembangunan will offset losses from the drop in Bank Pembangunan's long position.| Pakuwon Jati vs. Ciputra Development Tbk | Pakuwon Jati vs. Bumi Serpong Damai | Pakuwon Jati vs. Alam Sutera Realty | Pakuwon Jati vs. Lippo Karawaci Tbk |
| Bank Pembangunan vs. Paninvest Tbk | Bank Pembangunan vs. Maskapai Reasuransi Indonesia | Bank Pembangunan vs. Panin Sekuritas Tbk | Bank Pembangunan vs. Wahana Ottomitra Multiartha |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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