Correlation Between PT Bank and Apollo Bancorp

Can any of the company-specific risk be diversified away by investing in both PT Bank and Apollo Bancorp 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 Apollo Bancorp 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 Apollo Bancorp, you can compare the effects of market volatilities on PT Bank and Apollo Bancorp 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 Apollo Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of PT Bank and Apollo Bancorp.

Diversification Opportunities for PT Bank and Apollo Bancorp

-0.2

Correlation Coefficient

PT Bank  Apollo Bancorp

Good diversification

The 3 months correlation between BKRKF and Apollo is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding PT Bank Rakyat and Apollo Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apollo Bancorp 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 Apollo Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Apollo Bancorp has no effect on the direction of PT Bank i.e., PT Bank and Apollo Bancorp go up and down completely randomly.

Pair Corralation between PT Bank and Apollo Bancorp

Assuming the 90 days horizon PT Bank Rakyat is expected to generate 5.48 times more return on investment than Apollo Bancorp. However, PT Bank is 5.48 times more volatile than Apollo Bancorp. It trades about 0.05 of its potential returns per unit of risk. Apollo Bancorp is currently generating about 0.18 per unit of risk. If you would invest  23.00  in PT Bank Rakyat on December 27, 2024 and sell it today you would earn a total of  0.00  from holding PT Bank Rakyat or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	93.33%
Values	Daily Returns

PT Bank Rakyat  vs.  Apollo Bancorp

PT Bank Rakyat

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in PT Bank Rakyat are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile forward-looking signals, PT Bank reported solid returns over the last few months and may actually be approaching a breakup point.

Apollo Bancorp

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Apollo Bancorp are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of very weak essential indicators, Apollo Bancorp displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with PT Bank and Apollo Bancorp

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

The idea behind PT Bank Rakyat and Apollo Bancorp 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.