Correlation Between PT Bank and FG Merger

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

Diversification Opportunities for PT Bank and FG Merger

-0.41

Correlation Coefficient

PT Bank  FG Merger

Very good diversification

The 3 months correlation between BKRKF and FGMCU is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding PT Bank Rakyat and FG Merger Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FG Merger 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 FG Merger. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FG Merger Corp has no effect on the direction of PT Bank i.e., PT Bank and FG Merger go up and down completely randomly.

Pair Corralation between PT Bank and FG Merger

If you would invest  1,066  in FG Merger Corp on October 9, 2024 and sell it today you would earn a total of  0.00  from holding FG Merger Corp or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	5.26%
Values	Daily Returns

PT Bank Rakyat  vs.  FG Merger 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 fragile 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.

FG Merger Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days FG Merger Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable fundamental indicators, FG Merger 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 FG Merger

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

The idea behind PT Bank Rakyat and FG Merger 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.