Correlation Between Grupo Carso and PT Bank

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

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

Diversification Opportunities for Grupo Carso and PT Bank

0.11

Correlation Coefficient

Grupo Carso  PT Bank

Average diversification

The 3 months correlation between Grupo and BYRA is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Grupo Carso SAB 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 Grupo Carso 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 Grupo Carso SAB 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 Grupo Carso i.e., Grupo Carso and PT Bank go up and down completely randomly.

Pair Corralation between Grupo Carso and PT Bank

Assuming the 90 days horizon Grupo Carso SAB is expected to under-perform the PT Bank. But the stock apears to be less risky and, when comparing its historical volatility, Grupo Carso SAB is 3.41 times less risky than PT Bank. The stock trades about -0.25 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 30, 2024 and sell it today you would lose (2.00) from holding PT Bank Rakyat or give up 8.0% of portfolio value over 90 days.

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

Grupo Carso SAB  vs.  PT Bank Rakyat

Grupo Carso SAB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Grupo Carso SAB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Grupo Carso is not utilizing all of its potentials. The newest 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 January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Grupo Carso and PT Bank

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

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 Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.