Correlation Between BJs Wholesale and PT Bank

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

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

Diversification Opportunities for BJs Wholesale and PT Bank

-0.29

Correlation Coefficient

BJs Wholesale  PT Bank

Very good diversification

The 3 months correlation between BJs and BYRA is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding BJs Wholesale Club 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 BJs Wholesale 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 BJs Wholesale Club 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 BJs Wholesale i.e., BJs Wholesale and PT Bank go up and down completely randomly.

Pair Corralation between BJs Wholesale and PT Bank

Assuming the 90 days horizon BJs Wholesale Club is expected to generate 0.33 times more return on investment than PT Bank. However, BJs Wholesale Club is 3.0 times less risky than PT Bank. It trades about 0.11 of its potential returns per unit of risk. PT Bank Rakyat is currently generating about 0.01 per unit of risk. If you would invest  8,800  in BJs Wholesale Club on December 28, 2024 and sell it today you would earn a total of  1,400  from holding BJs Wholesale Club or generate 15.91% return on investment over 90 days.

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

BJs Wholesale Club  vs.  PT Bank Rakyat

BJs Wholesale Club

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in BJs Wholesale Club are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, BJs Wholesale reported solid returns over the last few months and may actually be approaching a breakup point.

PT Bank Rakyat

Risk-Adjusted Performance

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 nearly stable basic indicators, PT Bank is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with BJs Wholesale and PT Bank

The main advantage of trading using opposite BJs Wholesale and PT Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BJs Wholesale 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 BJs Wholesale Club 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 Commodity Directory module to find actively traded commodities issued by global exchanges.