Correlation Between WESTLAKE CHEMICAL and PT Bank
Can any of the company-specific risk be diversified away by investing in both WESTLAKE CHEMICAL 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 WESTLAKE CHEMICAL and PT Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between WESTLAKE CHEMICAL and PT Bank Maybank, you can compare the effects of market volatilities on WESTLAKE CHEMICAL 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 WESTLAKE CHEMICAL with a short position of PT Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of WESTLAKE CHEMICAL and PT Bank.
Diversification Opportunities for WESTLAKE CHEMICAL and PT Bank
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between WESTLAKE and BOZA is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding WESTLAKE CHEMICAL and PT Bank Maybank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PT Bank Maybank and WESTLAKE CHEMICAL 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 WESTLAKE CHEMICAL 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 Maybank has no effect on the direction of WESTLAKE CHEMICAL i.e., WESTLAKE CHEMICAL and PT Bank go up and down completely randomly.
Pair Corralation between WESTLAKE CHEMICAL and PT Bank
Assuming the 90 days trading horizon WESTLAKE CHEMICAL is expected to generate 0.47 times more return on investment than PT Bank. However, WESTLAKE CHEMICAL is 2.11 times less risky than PT Bank. It trades about 0.08 of its potential returns per unit of risk. PT Bank Maybank is currently generating about 0.01 per unit of risk. If you would invest 12,300 in WESTLAKE CHEMICAL on August 28, 2024 and sell it today you would earn a total of 300.00 from holding WESTLAKE CHEMICAL or generate 2.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
WESTLAKE CHEMICAL vs. PT Bank Maybank
Performance |
| Timeline |
| WESTLAKE CHEMICAL |
| PT Bank Maybank |
WESTLAKE CHEMICAL and PT Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WESTLAKE CHEMICAL and PT Bank
The main advantage of trading using opposite WESTLAKE CHEMICAL and PT Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WESTLAKE CHEMICAL 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.| WESTLAKE CHEMICAL vs. Apple Inc | WESTLAKE CHEMICAL vs. Apple Inc | WESTLAKE CHEMICAL vs. Apple Inc | WESTLAKE CHEMICAL vs. Microsoft |
| PT Bank vs. SCANDMEDICAL SOLDK 040 | PT Bank vs. Compugroup Medical SE | PT Bank vs. Perdoceo Education | PT Bank vs. EMBARK EDUCATION LTD |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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