Correlation Between New Residential and PT Bank
Can any of the company-specific risk be diversified away by investing in both New Residential 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 New Residential and PT Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between New Residential Investment and PT Bank Mandiri, you can compare the effects of market volatilities on New Residential 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 New Residential with a short position of PT Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of New Residential and PT Bank.
Diversification Opportunities for New Residential and PT Bank
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between New and PQ9 is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding New Residential Investment 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 New Residential 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 New Residential Investment 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 New Residential i.e., New Residential and PT Bank go up and down completely randomly.
Pair Corralation between New Residential and PT Bank
Assuming the 90 days trading horizon New Residential Investment is expected to generate 0.23 times more return on investment than PT Bank. However, New Residential Investment is 4.31 times less risky than PT Bank. It trades about 0.08 of its potential returns per unit of risk. PT Bank Mandiri is currently generating about -0.06 per unit of risk. If you would invest 1,020 in New Residential Investment on December 27, 2024 and sell it today you would earn a total of 59.00 from holding New Residential Investment or generate 5.78% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
New Residential Investment vs. PT Bank Mandiri
Performance |
Timeline |
New Residential Inve |
PT Bank Mandiri |
New Residential and PT Bank Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with New Residential and PT Bank
The main advantage of trading using opposite New Residential and PT Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New Residential 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.New Residential vs. BP plc | New Residential vs. Alpha Services and | New Residential vs. JADE ROAD INVESTMENTS | New Residential vs. Nutanix |
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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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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