Correlation Between PT Bank and Cibl

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

Diversification Opportunities for PT Bank and Cibl

-0.06

Correlation Coefficient

PT Bank  Cibl

Good diversification

The 3 months correlation between BKRKF and Cibl is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding PT Bank Rakyat and Cibl Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cibl Inc 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 Cibl. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cibl Inc has no effect on the direction of PT Bank i.e., PT Bank and Cibl go up and down completely randomly.

Pair Corralation between PT Bank and Cibl

Assuming the 90 days horizon PT Bank Rakyat is expected to generate 4.85 times more return on investment than Cibl. However, PT Bank is 4.85 times more volatile than Cibl Inc. It trades about 0.05 of its potential returns per unit of risk. Cibl Inc is currently generating about -0.04 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.  Cibl Inc

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.

Cibl Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Cibl Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong fundamental drivers, Cibl is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with PT Bank and Cibl

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

The idea behind PT Bank Rakyat and Cibl Inc 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.