Correlation Between Exxon and PT Bank
Can any of the company-specific risk be diversified away by investing in both Exxon 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 Exxon and PT Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Exxon Mobil Corp and PT Bank Rakyat, you can compare the effects of market volatilities on Exxon 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 Exxon with a short position of PT Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Exxon and PT Bank.
Diversification Opportunities for Exxon and PT Bank
Excellent diversification
The 3 months correlation between Exxon and BKRKF is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Exxon Mobil Corp 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 Exxon 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 Exxon Mobil Corp 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 Exxon i.e., Exxon and PT Bank go up and down completely randomly.
Pair Corralation between Exxon and PT Bank
Considering the 90-day investment horizon Exxon Mobil Corp is expected to generate 0.29 times more return on investment than PT Bank. However, Exxon Mobil Corp is 3.49 times less risky than PT Bank. It trades about 0.07 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 11,537 in Exxon Mobil Corp on August 23, 2024 and sell it today you would earn a total of 656.00 from holding Exxon Mobil Corp or generate 5.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Exxon Mobil Corp vs. PT Bank Rakyat
Performance |
| Timeline |
| Exxon Mobil Corp |
| PT Bank Rakyat |
Exxon and PT Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Exxon and PT Bank
The main advantage of trading using opposite Exxon and PT Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Exxon 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.| Exxon vs. Chevron Corp | Exxon vs. Small Cap Core | Exxon vs. Freedom Holding Corp | Exxon vs. Gfl Environmental Holdings |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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