Correlation Between PT Bank and Data#3

Can any of the company-specific risk be diversified away by investing in both PT Bank and Data#3 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 Data#3 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 Data3 Limited, you can compare the effects of market volatilities on PT Bank and Data#3 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 Data#3. Check out your portfolio center. Please also check ongoing floating volatility patterns of PT Bank and Data#3.

Diversification Opportunities for PT Bank and Data#3

-0.32

Correlation Coefficient

PT Bank  Data#3

Very good diversification

The 3 months correlation between BKRKF and Data#3 is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding PT Bank Rakyat and Data3 Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Data3 Limited 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 Data#3. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Data3 Limited has no effect on the direction of PT Bank i.e., PT Bank and Data#3 go up and down completely randomly.

Pair Corralation between PT Bank and Data#3

Assuming the 90 days horizon PT Bank Rakyat is expected to generate 36.82 times more return on investment than Data#3. However, PT Bank is 36.82 times more volatile than Data3 Limited. It trades about 0.05 of its potential returns per unit of risk. Data3 Limited is currently generating about 0.13 per unit of risk. If you would invest  23.00  in PT Bank Rakyat on December 28, 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	95.0%
Values	Daily Returns

PT Bank Rakyat  vs.  Data3 Limited

PT Bank Rakyat

Risk-Adjusted Performance

Insignificant

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 weak forward-looking signals, PT Bank reported solid returns over the last few months and may actually be approaching a breakup point.

Data3 Limited

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Data3 Limited are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Data#3 is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with PT Bank and Data#3

The main advantage of trading using opposite PT Bank and Data#3 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PT Bank position performs unexpectedly, Data#3 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 Data#3 will offset losses from the drop in Data#3's long position.

The idea behind PT Bank Rakyat and Data3 Limited 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.