Correlation Between Regions Financial and PT Bayan
Can any of the company-specific risk be diversified away by investing in both Regions Financial and PT Bayan 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 Regions Financial and PT Bayan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Regions Financial and PT Bayan Resources, you can compare the effects of market volatilities on Regions Financial and PT Bayan 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 Regions Financial with a short position of PT Bayan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Regions Financial and PT Bayan.
Diversification Opportunities for Regions Financial and PT Bayan
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Regions and BNB is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Regions Financial and PT Bayan Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PT Bayan Resources and Regions Financial 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 Regions Financial are associated (or correlated) with PT Bayan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PT Bayan Resources has no effect on the direction of Regions Financial i.e., Regions Financial and PT Bayan go up and down completely randomly.
Pair Corralation between Regions Financial and PT Bayan
Assuming the 90 days horizon Regions Financial is expected to generate 1.05 times less return on investment than PT Bayan. But when comparing it to its historical volatility, Regions Financial is 1.55 times less risky than PT Bayan. It trades about 0.31 of its potential returns per unit of risk. PT Bayan Resources is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 97.00 in PT Bayan Resources on September 5, 2024 and sell it today you would earn a total of 18.00 from holding PT Bayan Resources or generate 18.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Regions Financial vs. PT Bayan Resources
Performance |
| Timeline |
| Regions Financial |
| PT Bayan Resources |
Regions Financial and PT Bayan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Regions Financial and PT Bayan
The main advantage of trading using opposite Regions Financial and PT Bayan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Regions Financial position performs unexpectedly, PT Bayan 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 PT Bayan will offset losses from the drop in PT Bayan's long position.The idea behind Regions Financial and PT Bayan Resources 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.| PT Bayan vs. Regions Financial | PT Bayan vs. JD SPORTS FASH | PT Bayan vs. G III Apparel Group | PT Bayan vs. ANTA SPORTS PRODUCT |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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