Correlation Between River Financial and PT Bank
Can any of the company-specific risk be diversified away by investing in both River Financial and PT Bank 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 River Financial and PT Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between River Financial and PT Bank Rakyat, you can compare the effects of market volatilities on River Financial and PT Bank 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 River Financial with a short position of PT Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of River Financial and PT Bank.
Diversification Opportunities for River Financial and PT Bank
-0.17 | Correlation Coefficient |
Good diversification
The 3 months correlation between River and BKRKF is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding River Financial and PT Bank Rakyat in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PT Bank Rakyat and River 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 River Financial are associated (or correlated) with PT Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PT Bank Rakyat has no effect on the direction of River Financial i.e., River Financial and PT Bank go up and down completely randomly.
Pair Corralation between River Financial and PT Bank
Given the investment horizon of 90 days River Financial is expected to under-perform the PT Bank. But the pink sheet apears to be less risky and, when comparing its historical volatility, River Financial is 6.3 times less risky than PT Bank. The pink sheet trades about -0.02 of its potential returns per unit of risk. The PT Bank Rakyat is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 25.00 in PT Bank Rakyat on September 14, 2024 and sell it today you would earn a total of 1.00 from holding PT Bank Rakyat or generate 4.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 92.57% |
| Values | Daily Returns |
River Financial vs. PT Bank Rakyat
Performance |
| Timeline |
| River Financial |
| PT Bank Rakyat |
River Financial and PT Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with River Financial and PT Bank
The main advantage of trading using opposite River Financial and PT Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if River Financial position performs unexpectedly, PT Bank 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 Bank will offset losses from the drop in PT Bank's long position.| River Financial vs. PT Bank Rakyat | River Financial vs. Morningstar Unconstrained Allocation | River Financial vs. Bondbloxx ETF Trust | River Financial vs. Spring Valley Acquisition |
| PT Bank vs. Bank Mandiri Persero | PT Bank vs. Piraeus Bank SA | PT Bank vs. Eurobank Ergasias Services | PT Bank vs. Kasikornbank Public Co |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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