Correlation Between Two Rivers and PSB Holdings
Can any of the company-specific risk be diversified away by investing in both Two Rivers and PSB Holdings 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 Two Rivers and PSB Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Two Rivers Financial and PSB Holdings, you can compare the effects of market volatilities on Two Rivers and PSB Holdings 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 Two Rivers with a short position of PSB Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Two Rivers and PSB Holdings.
Diversification Opportunities for Two Rivers and PSB Holdings
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Two and PSB is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Two Rivers Financial and PSB Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PSB Holdings and Two Rivers 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 Two Rivers Financial are associated (or correlated) with PSB Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PSB Holdings has no effect on the direction of Two Rivers i.e., Two Rivers and PSB Holdings go up and down completely randomly.
Pair Corralation between Two Rivers and PSB Holdings
Given the investment horizon of 90 days Two Rivers Financial is expected to generate 0.86 times more return on investment than PSB Holdings. However, Two Rivers Financial is 1.16 times less risky than PSB Holdings. It trades about 0.47 of its potential returns per unit of risk. PSB Holdings is currently generating about 0.3 per unit of risk. If you would invest 3,000 in Two Rivers Financial on August 26, 2024 and sell it today you would earn a total of 300.00 from holding Two Rivers Financial or generate 10.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Two Rivers Financial vs. PSB Holdings
Performance |
| Timeline |
| Two Rivers Financial |
| PSB Holdings |
Two Rivers and PSB Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Two Rivers and PSB Holdings
The main advantage of trading using opposite Two Rivers and PSB Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Two Rivers position performs unexpectedly, PSB Holdings 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 PSB Holdings will offset losses from the drop in PSB Holdings' long position.| Two Rivers vs. PSB Holdings | Two Rivers vs. United Overseas Bank | Two Rivers vs. Turkiye Garanti Bankasi |
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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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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