Correlation Between PT Bank and Internet Infinity

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

Diversification Opportunities for PT Bank and Internet Infinity

0.31

Correlation Coefficient

PT Bank  Internet Infinity

Weak diversification

The 3 months correlation between BKRKF and Internet is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding PT Bank Rakyat and Internet Infinity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Internet Infinity 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 Internet Infinity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Internet Infinity has no effect on the direction of PT Bank i.e., PT Bank and Internet Infinity go up and down completely randomly.

Pair Corralation between PT Bank and Internet Infinity

Assuming the 90 days horizon PT Bank Rakyat is expected to generate 0.98 times more return on investment than Internet Infinity. However, PT Bank Rakyat is 1.02 times less risky than Internet Infinity. It trades about 0.04 of its potential returns per unit of risk. Internet Infinity is currently generating about -0.06 per unit of risk. If you would invest  23.00  in PT Bank Rakyat on December 22, 2024 and sell it today you would lose (1.00) from holding PT Bank Rakyat or give up 4.35% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	85.94%
Values	Daily Returns

PT Bank Rakyat  vs.  Internet Infinity

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.

Internet Infinity

Risk-Adjusted Performance

Very Weak

Over the last 90 days Internet Infinity 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 basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with PT Bank and Internet Infinity

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

The idea behind PT Bank Rakyat and Internet Infinity 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.