Correlation Between SEALED AIR and PT Bank
Can any of the company-specific risk be diversified away by investing in both SEALED AIR 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 SEALED AIR and PT Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SEALED AIR and PT Bank Mandiri, you can compare the effects of market volatilities on SEALED AIR 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 SEALED AIR with a short position of PT Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of SEALED AIR and PT Bank.
Diversification Opportunities for SEALED AIR and PT Bank
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between SEALED and PQ9 is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding SEALED AIR and PT Bank Mandiri in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PT Bank Mandiri and SEALED AIR 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 SEALED AIR 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 Mandiri has no effect on the direction of SEALED AIR i.e., SEALED AIR and PT Bank go up and down completely randomly.
Pair Corralation between SEALED AIR and PT Bank
Assuming the 90 days trading horizon SEALED AIR is expected to generate 1.8 times less return on investment than PT Bank. But when comparing it to its historical volatility, SEALED AIR is 3.6 times less risky than PT Bank. It trades about 0.1 of its potential returns per unit of risk. PT Bank Mandiri is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 37.00 in PT Bank Mandiri on September 14, 2024 and sell it today you would earn a total of 1.00 from holding PT Bank Mandiri or generate 2.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SEALED AIR vs. PT Bank Mandiri
Performance |
| Timeline |
| SEALED AIR |
| PT Bank Mandiri |
SEALED AIR and PT Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SEALED AIR and PT Bank
The main advantage of trading using opposite SEALED AIR and PT Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SEALED AIR 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.The idea behind SEALED AIR and PT Bank Mandiri 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 Bank vs. China Merchants Bank | PT Bank vs. HDFC Bank Limited | PT Bank vs. ICICI Bank Limited | PT Bank vs. PT Bank Central |
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 Stocks Directory module to find actively traded stocks across global markets.
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