Correlation Between PT Bank and Arteris

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

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

Diversification Opportunities for PT Bank and Arteris

-0.67

Correlation Coefficient

PT Bank  Arteris

Excellent diversification

The 3 months correlation between BKRKF and Arteris is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding PT Bank Rakyat and Arteris in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arteris 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 Rakyat are associated (or correlated) with Arteris. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arteris has no effect on the direction of PT Bank i.e., PT Bank and Arteris go up and down completely randomly.

Pair Corralation between PT Bank and Arteris

Assuming the 90 days horizon PT Bank is expected to generate 2.01 times less return on investment than Arteris. In addition to that, PT Bank is 1.21 times more volatile than Arteris. It trades about 0.02 of its total potential returns per unit of risk. Arteris is currently generating about 0.06 per unit of volatility. If you would invest  515.00  in Arteris on October 4, 2024 and sell it today you would earn a total of  618.00  from holding Arteris or generate 120.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	81.65%
Values	Daily Returns

PT Bank Rakyat  vs.  Arteris

PT Bank Rakyat

Risk-Adjusted Performance

0 of 100

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 latest fragile performance, the Stock's forward-looking signals remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Arteris

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Arteris are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak forward indicators, Arteris reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with PT Bank and Arteris

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

The idea behind PT Bank Rakyat and Arteris 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.