Correlation Between PT Jasa and PNC Financial

Can any of the company-specific risk be diversified away by investing in both PT Jasa and PNC Financial 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 Jasa and PNC Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between PT Jasa Marga and The PNC Financial, you can compare the effects of market volatilities on PT Jasa and PNC Financial 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 Jasa with a short position of PNC Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of PT Jasa and PNC Financial.

Diversification Opportunities for PT Jasa and PNC Financial

-0.75

Correlation Coefficient

PT Jasa  PNC Financial

Pay attention - limited upside

The 3 months correlation between 0JM and PNC is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding PT Jasa Marga and The PNC Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PNC Financial and PT Jasa 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 Jasa Marga are associated (or correlated) with PNC Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PNC Financial has no effect on the direction of PT Jasa i.e., PT Jasa and PNC Financial go up and down completely randomly.

Pair Corralation between PT Jasa and PNC Financial

Assuming the 90 days horizon PT Jasa Marga is expected to under-perform the PNC Financial. In addition to that, PT Jasa is 1.55 times more volatile than The PNC Financial. It trades about -0.03 of its total potential returns per unit of risk. The PNC Financial is currently generating about 0.19 per unit of volatility. If you would invest  15,854  in The PNC Financial on September 13, 2024 and sell it today you would earn a total of  3,546  from holding The PNC Financial or generate 22.37% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.46%
Values	Daily Returns

PT Jasa Marga  vs.  The PNC Financial

PT Jasa Marga

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PT Jasa Marga has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, PT Jasa is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

PNC Financial

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in The PNC Financial are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, PNC Financial reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with PT Jasa and PNC Financial

The main advantage of trading using opposite PT Jasa and PNC Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PT Jasa position performs unexpectedly, PNC Financial 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 PNC Financial will offset losses from the drop in PNC Financial's long position.

The idea behind PT Jasa Marga and The PNC Financial pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.