Correlation Between Sabre Insurance and PT Bank

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

By analyzing existing cross correlation between Sabre Insurance Group and PT Bank Rakyat, you can compare the effects of market volatilities on Sabre Insurance 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 Sabre Insurance with a short position of PT Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sabre Insurance and PT Bank.

Diversification Opportunities for Sabre Insurance and PT Bank

-0.12

Correlation Coefficient

Sabre Insurance  PT Bank

Good diversification

The 3 months correlation between Sabre and BYRA is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Sabre Insurance Group 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 Sabre Insurance 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 Sabre Insurance Group 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 Sabre Insurance i.e., Sabre Insurance and PT Bank go up and down completely randomly.

Pair Corralation between Sabre Insurance and PT Bank

Assuming the 90 days horizon Sabre Insurance is expected to generate 4.14 times less return on investment than PT Bank. But when comparing it to its historical volatility, Sabre Insurance Group is 2.62 times less risky than PT Bank. It trades about 0.01 of its potential returns per unit of risk. PT Bank Rakyat is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  35.00  in PT Bank Rakyat on October 4, 2024 and sell it today you would lose (11.00) from holding PT Bank Rakyat or give up 31.43% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Sabre Insurance Group  vs.  PT Bank Rakyat

Sabre Insurance Group

Risk-Adjusted Performance

0 of 100

Very Weak

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

PT Bank Rakyat

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PT Bank Rakyat has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Sabre Insurance and PT Bank

The main advantage of trading using opposite Sabre Insurance and PT Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sabre Insurance 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.

The idea behind Sabre Insurance Group and PT Bank Rakyat 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 Commodity Directory module to find actively traded commodities issued by global exchanges.