Correlation Between Corporate Office and PT Bank
Can any of the company-specific risk be diversified away by investing in both Corporate Office 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 Corporate Office and PT Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Corporate Office Properties and PT Bank Mandiri, you can compare the effects of market volatilities on Corporate Office 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 Corporate Office with a short position of PT Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Corporate Office and PT Bank.
Diversification Opportunities for Corporate Office and PT Bank
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Corporate and PQ9 is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Corporate Office Properties 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 Corporate Office 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 Corporate Office Properties 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 Corporate Office i.e., Corporate Office and PT Bank go up and down completely randomly.
Pair Corralation between Corporate Office and PT Bank
Assuming the 90 days horizon Corporate Office Properties is expected to under-perform the PT Bank. But the stock apears to be less risky and, when comparing its historical volatility, Corporate Office Properties is 4.05 times less risky than PT Bank. The stock trades about -0.17 of its potential returns per unit of risk. The PT Bank Mandiri is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 32.00 in PT Bank Mandiri on October 24, 2024 and sell it today you would earn a total of 2.00 from holding PT Bank Mandiri or generate 6.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Corporate Office Properties vs. PT Bank Mandiri
Performance |
| Timeline |
| Corporate Office Pro |
| PT Bank Mandiri |
Corporate Office and PT Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Corporate Office and PT Bank
The main advantage of trading using opposite Corporate Office and PT Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Corporate Office 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.| Corporate Office vs. Cairo Communication SpA | Corporate Office vs. COMBA TELECOM SYST | Corporate Office vs. Iridium Communications | Corporate Office vs. CHINA EDUCATION GROUP |
| PT Bank vs. Gladstone Investment | PT Bank vs. Corporate Office Properties | PT Bank vs. Scottish Mortgage Investment | PT Bank vs. SLR Investment Corp |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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