Correlation Between PT Bank and Gjensidige Forsikring

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

Diversification Opportunities for PT Bank and Gjensidige Forsikring

-0.46

Correlation Coefficient

PT Bank  Gjensidige Forsikring

Very good diversification

The 3 months correlation between BKRKF and Gjensidige is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding PT Bank Rakyat and Gjensidige Forsikring ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gjensidige Forsikring ASA 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 Gjensidige Forsikring. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gjensidige Forsikring ASA has no effect on the direction of PT Bank i.e., PT Bank and Gjensidige Forsikring go up and down completely randomly.

Pair Corralation between PT Bank and Gjensidige Forsikring

Assuming the 90 days horizon PT Bank Rakyat is expected to under-perform the Gjensidige Forsikring. In addition to that, PT Bank is 2.24 times more volatile than Gjensidige Forsikring ASA. It trades about -0.11 of its total potential returns per unit of risk. Gjensidige Forsikring ASA is currently generating about 0.21 per unit of volatility. If you would invest  1,540  in Gjensidige Forsikring ASA on September 5, 2024 and sell it today you would earn a total of  212.00  from holding Gjensidige Forsikring ASA or generate 13.77% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.45%
Values	Daily Returns

PT Bank Rakyat  vs.  Gjensidige Forsikring ASA

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 weak performance in the last few months, the Stock's forward-looking signals remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Gjensidige Forsikring ASA

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Gjensidige Forsikring ASA are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly conflicting basic indicators, Gjensidige Forsikring reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with PT Bank and Gjensidige Forsikring

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

The idea behind PT Bank Rakyat and Gjensidige Forsikring ASA 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.