Correlation Between PT Bank and Delhi Bank

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

Diversification Opportunities for PT Bank and Delhi Bank

-0.26

Correlation Coefficient

PT Bank  Delhi Bank

Very good diversification

The 3 months correlation between BKRKF and Delhi is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding PT Bank Rakyat and Delhi Bank Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Delhi Bank 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 Delhi Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Delhi Bank Corp has no effect on the direction of PT Bank i.e., PT Bank and Delhi Bank go up and down completely randomly.

Pair Corralation between PT Bank and Delhi Bank

Assuming the 90 days horizon PT Bank Rakyat is expected to generate 15.12 times more return on investment than Delhi Bank. However, PT Bank is 15.12 times more volatile than Delhi Bank Corp. It trades about 0.02 of its potential returns per unit of risk. Delhi Bank Corp is currently generating about 0.06 per unit of risk. If you would invest  33.00  in PT Bank Rakyat on December 2, 2024 and sell it today you would lose (9.00) from holding PT Bank Rakyat or give up 27.27% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	71.13%
Values	Daily Returns

PT Bank Rakyat  vs.  Delhi Bank Corp

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 4 (%) 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.

Delhi Bank Corp

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Delhi Bank Corp are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Delhi Bank is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with PT Bank and Delhi Bank

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

The idea behind PT Bank Rakyat and Delhi Bank 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 Stocks Directory module to find actively traded stocks across global markets.