Correlation Between PT Bank and JRSIS Health

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

Diversification Opportunities for PT Bank and JRSIS Health

0.74

Correlation Coefficient

PT Bank  JRSIS Health

Poor diversification

The 3 months correlation between BKRKF and JRSIS is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding PT Bank Rakyat and JRSIS Health Care in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JRSIS Health Care 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 JRSIS Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JRSIS Health Care has no effect on the direction of PT Bank i.e., PT Bank and JRSIS Health go up and down completely randomly.

Pair Corralation between PT Bank and JRSIS Health

Assuming the 90 days horizon PT Bank is expected to generate 37.25 times less return on investment than JRSIS Health. But when comparing it to its historical volatility, PT Bank Rakyat is 2.64 times less risky than JRSIS Health. It trades about 0.01 of its potential returns per unit of risk. JRSIS Health Care is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  12.00  in JRSIS Health Care on September 21, 2024 and sell it today you would earn a total of  3.00  from holding JRSIS Health Care or generate 25.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.45%
Values	Daily Returns

PT Bank Rakyat  vs.  JRSIS Health Care

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.

JRSIS Health Care

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days JRSIS Health Care has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest inconsistent performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with PT Bank and JRSIS Health

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

The idea behind PT Bank Rakyat and JRSIS Health Care 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.