Correlation Between Waste Management and PT Bank
Can any of the company-specific risk be diversified away by investing in both Waste Management 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 Waste Management and PT Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Waste Management and PT Bank Rakyat, you can compare the effects of market volatilities on Waste Management 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 Waste Management with a short position of PT Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Waste Management and PT Bank.
Diversification Opportunities for Waste Management and PT Bank
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Waste and BYRA is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Waste Management 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 Waste Management 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 Waste Management 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 Waste Management i.e., Waste Management and PT Bank go up and down completely randomly.
Pair Corralation between Waste Management and PT Bank
Assuming the 90 days trading horizon Waste Management is expected to generate 0.2 times more return on investment than PT Bank. However, Waste Management is 4.9 times less risky than PT Bank. It trades about 0.11 of its potential returns per unit of risk. PT Bank Rakyat is currently generating about 0.02 per unit of risk. If you would invest 15,167 in Waste Management on August 24, 2024 and sell it today you would earn a total of 5,978 from holding Waste Management or generate 39.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Waste Management vs. PT Bank Rakyat
Performance |
| Timeline |
| Waste Management |
| PT Bank Rakyat |
Waste Management and PT Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Waste Management and PT Bank
The main advantage of trading using opposite Waste Management and PT Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Waste Management 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.| Waste Management vs. SHIN ETSU CHEMICAL | Waste Management vs. TIANDE CHEMICAL | Waste Management vs. Renesas Electronics | Waste Management vs. UET United Electronic |
| PT Bank vs. Singapore Telecommunications Limited | PT Bank vs. Q2M Managementberatung AG | PT Bank vs. Waste Management | PT Bank vs. CEOTRONICS |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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