Correlation Between PT Bank and ImagineAR

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

Diversification Opportunities for PT Bank and ImagineAR

0.01

Correlation Coefficient

PT Bank  ImagineAR

Significant diversification

The 3 months correlation between BKRKF and ImagineAR is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding PT Bank Rakyat and ImagineAR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ImagineAR 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 ImagineAR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ImagineAR has no effect on the direction of PT Bank i.e., PT Bank and ImagineAR go up and down completely randomly.

Pair Corralation between PT Bank and ImagineAR

Assuming the 90 days horizon PT Bank is expected to generate 3.11 times less return on investment than ImagineAR. But when comparing it to its historical volatility, PT Bank Rakyat is 1.52 times less risky than ImagineAR. It trades about 0.03 of its potential returns per unit of risk. ImagineAR is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  2.62  in ImagineAR on December 2, 2024 and sell it today you would earn a total of  2.13  from holding ImagineAR or generate 81.3% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	51.01%
Values	Daily Returns

PT Bank Rakyat  vs.  ImagineAR

PT Bank Rakyat

Risk-Adjusted Performance

Modest

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.

ImagineAR

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in ImagineAR are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak technical and fundamental indicators, ImagineAR reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with PT Bank and ImagineAR

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

The idea behind PT Bank Rakyat and ImagineAR 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.

Check out your portfolio center.

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 Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.