Correlation Between PT Bank and Gan

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

Diversification Opportunities for PT Bank and Gan

0.12

Correlation Coefficient

PT Bank  Gan

Average diversification

The 3 months correlation between BKRKF and Gan is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding PT Bank Rakyat and Gan in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gan 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 Gan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gan has no effect on the direction of PT Bank i.e., PT Bank and Gan go up and down completely randomly.

Pair Corralation between PT Bank and Gan

Assuming the 90 days horizon PT Bank Rakyat is expected to generate 8.0 times more return on investment than Gan. However, PT Bank is 8.0 times more volatile than Gan. It trades about 0.03 of its potential returns per unit of risk. Gan is currently generating about -0.02 per unit of risk. If you would invest  23.00  in PT Bank Rakyat on December 27, 2024 and sell it today you would lose (2.00) from holding PT Bank Rakyat or give up 8.7% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	91.8%
Values	Daily Returns

PT Bank Rakyat  vs.  Gan

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 2 (%) 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.

Gan

Risk-Adjusted Performance

Very Weak

Over the last 90 days Gan has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Gan is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with PT Bank and Gan

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

The idea behind PT Bank Rakyat and Gan 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.