Correlation Between Pure Storage and PT Bank

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

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

Diversification Opportunities for Pure Storage and PT Bank

0.34

Correlation Coefficient

Pure Storage  PT Bank

Weak diversification

The 3 months correlation between Pure and BOZA is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Pure Storage and PT Bank Maybank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PT Bank Maybank and Pure Storage 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 Pure Storage 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 Maybank has no effect on the direction of Pure Storage i.e., Pure Storage and PT Bank go up and down completely randomly.

Pair Corralation between Pure Storage and PT Bank

Assuming the 90 days horizon Pure Storage is expected to under-perform the PT Bank. But the stock apears to be less risky and, when comparing its historical volatility, Pure Storage is 1.07 times less risky than PT Bank. The stock trades about -0.14 of its potential returns per unit of risk. The PT Bank Maybank is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  1.10  in PT Bank Maybank on December 22, 2024 and sell it today you would earn a total of  0.00  from holding PT Bank Maybank or generate 0.0% return on investment over 90 days.

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

Pure Storage  vs.  PT Bank Maybank

Pure Storage

Risk-Adjusted Performance

Very Weak

Over the last 90 days Pure Storage 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 April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

PT Bank Maybank

Risk-Adjusted Performance

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in PT Bank Maybank are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, PT Bank is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Pure Storage and PT Bank

The main advantage of trading using opposite Pure Storage and PT Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pure Storage 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 Pure Storage and PT Bank Maybank 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.