Correlation Between VIRG NATL and PT Bank

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

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

Diversification Opportunities for VIRG NATL and PT Bank

0.69

Correlation Coefficient

VIRG NATL  PT Bank

Poor diversification

The 3 months correlation between VIRG and BOZA is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding VIRG NATL BANKSH 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 VIRG NATL 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 VIRG NATL BANKSH 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 VIRG NATL i.e., VIRG NATL and PT Bank go up and down completely randomly.

Pair Corralation between VIRG NATL and PT Bank

Assuming the 90 days horizon VIRG NATL BANKSH is expected to under-perform the PT Bank. But the stock apears to be less risky and, when comparing its historical volatility, VIRG NATL BANKSH is 1.03 times less risky than PT Bank. The stock trades about -0.06 of its potential returns per unit of risk. The PT Bank Maybank is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest  1.10  in PT Bank Maybank on December 5, 2024 and sell it today you would lose (0.05) from holding PT Bank Maybank or give up 4.55% of portfolio value over 90 days.

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

VIRG NATL BANKSH  vs.  PT Bank Maybank

VIRG NATL BANKSH

Risk-Adjusted Performance

Very Weak

Over the last 90 days VIRG NATL BANKSH 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

Over the last 90 days PT Bank Maybank has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with VIRG NATL and PT Bank

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

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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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.