Correlation Between Bankinter and PT Bank

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

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

Diversification Opportunities for Bankinter and PT Bank

-0.09

Correlation Coefficient

Bankinter  PT Bank

Good diversification

The 3 months correlation between Bankinter and PBCRF is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Bankinter SA ADR and PT Bank Central in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PT Bank Central and Bankinter 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 Bankinter SA ADR 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 Central has no effect on the direction of Bankinter i.e., Bankinter and PT Bank go up and down completely randomly.

Pair Corralation between Bankinter and PT Bank

Assuming the 90 days horizon Bankinter SA ADR is expected to generate 0.59 times more return on investment than PT Bank. However, Bankinter SA ADR is 1.68 times less risky than PT Bank. It trades about 0.14 of its potential returns per unit of risk. PT Bank Central is currently generating about -0.07 per unit of risk. If you would invest  818.00  in Bankinter SA ADR on November 19, 2024 and sell it today you would earn a total of  160.00  from holding Bankinter SA ADR or generate 19.56% return on investment over 90 days.

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

Bankinter SA ADR  vs.  PT Bank Central

Bankinter SA ADR

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Bankinter SA ADR are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak forward indicators, Bankinter showed solid returns over the last few months and may actually be approaching a breakup point.

PT Bank Central

Risk-Adjusted Performance

Very Weak

Over the last 90 days PT Bank Central has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in March 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Bankinter and PT Bank

The main advantage of trading using opposite Bankinter and PT Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bankinter 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 Bankinter SA ADR and PT Bank Central 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.