Correlation Between PT Bank and BYTE Acquisition

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

Diversification Opportunities for PT Bank and BYTE Acquisition

-0.58

Correlation Coefficient

PT Bank  BYTE Acquisition

Excellent diversification

The 3 months correlation between BKRKF and BYTE is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding PT Bank Rakyat and BYTE Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BYTE Acquisition Corp 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 BYTE Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BYTE Acquisition Corp has no effect on the direction of PT Bank i.e., PT Bank and BYTE Acquisition go up and down completely randomly.

Pair Corralation between PT Bank and BYTE Acquisition

Assuming the 90 days horizon PT Bank Rakyat is expected to generate 2.67 times more return on investment than BYTE Acquisition. However, PT Bank is 2.67 times more volatile than BYTE Acquisition Corp. It trades about 0.02 of its potential returns per unit of risk. BYTE Acquisition Corp is currently generating about 0.03 per unit of risk. If you would invest  29.00  in PT Bank Rakyat on September 19, 2024 and sell it today you would lose (3.00) from holding PT Bank Rakyat or give up 10.34% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	34.81%
Values	Daily Returns

PT Bank Rakyat  vs.  BYTE Acquisition Corp

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 weak 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.

BYTE Acquisition Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BYTE Acquisition Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, BYTE Acquisition is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with PT Bank and BYTE Acquisition

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

The idea behind PT Bank Rakyat and BYTE Acquisition Corp 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.