Correlation Between PT Global and PT Bank
Can any of the company-specific risk be diversified away by investing in both PT Global 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 PT Global and PT Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PT Global Mediacom and PT Bank Rakyat, you can compare the effects of market volatilities on PT Global 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 PT Global with a short position of PT Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of PT Global and PT Bank.
Diversification Opportunities for PT Global and PT Bank
Poor diversification
The 3 months correlation between 06L and BYRA is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding PT Global Mediacom 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 PT Global 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 PT Global Mediacom 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 PT Global i.e., PT Global and PT Bank go up and down completely randomly.
Pair Corralation between PT Global and PT Bank
Assuming the 90 days trading horizon PT Global Mediacom is expected to under-perform the PT Bank. But the stock apears to be less risky and, when comparing its historical volatility, PT Global Mediacom is 1.42 times less risky than PT Bank. The stock trades about -0.23 of its potential returns per unit of risk. The PT Bank Rakyat is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 25.00 in PT Bank Rakyat on September 24, 2024 and sell it today you would earn a total of 0.00 from holding PT Bank Rakyat or generate 0.0% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
PT Global Mediacom vs. PT Bank Rakyat
Performance |
Timeline |
PT Global Mediacom |
PT Bank Rakyat |
PT Global and PT Bank Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with PT Global and PT Bank
The main advantage of trading using opposite PT Global and PT Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PT Global 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.PT Global vs. The Walt Disney | PT Global vs. The Walt Disney | PT Global vs. Charter Communications | PT Global vs. Warner Music Group |
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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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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