Correlation Between PT Bank and Protech Mitra

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

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

Diversification Opportunities for PT Bank and Protech Mitra

0.1

Correlation Coefficient

PT Bank  Protech Mitra

Average diversification

The 3 months correlation between BBSI and Protech is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding PT Bank Bisnis and Protech Mitra Perkasa in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Protech Mitra Perkasa and PT Bank 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 PT Bank Bisnis are associated (or correlated) with Protech Mitra. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Protech Mitra Perkasa has no effect on the direction of PT Bank i.e., PT Bank and Protech Mitra go up and down completely randomly.

Pair Corralation between PT Bank and Protech Mitra

Assuming the 90 days trading horizon PT Bank Bisnis is expected to under-perform the Protech Mitra. But the stock apears to be less risky and, when comparing its historical volatility, PT Bank Bisnis is 1.17 times less risky than Protech Mitra. The stock trades about -0.05 of its potential returns per unit of risk. The Protech Mitra Perkasa is currently generating about 0.3 of returns per unit of risk over similar time horizon. If you would invest  12,800  in Protech Mitra Perkasa on September 16, 2024 and sell it today you would earn a total of  1,500  from holding Protech Mitra Perkasa or generate 11.72% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

PT Bank Bisnis  vs.  Protech Mitra Perkasa

PT Bank Bisnis

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PT Bank Bisnis has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, PT Bank is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Protech Mitra Perkasa

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Protech Mitra Perkasa has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Protech Mitra is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with PT Bank and Protech Mitra

The main advantage of trading using opposite PT Bank and Protech Mitra positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PT Bank position performs unexpectedly, Protech Mitra 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 Protech Mitra will offset losses from the drop in Protech Mitra's long position.

The idea behind PT Bank Bisnis and Protech Mitra Perkasa 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.