Correlation Between PT Bank and Kimberly Clark

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

Diversification Opportunities for PT Bank and Kimberly Clark

0.64

Correlation Coefficient

PT Bank  Kimberly Clark

Poor diversification

The 3 months correlation between BKRKF and Kimberly is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding PT Bank Rakyat and Kimberly Clark de Mexico in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kimberly Clark de 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 Kimberly Clark. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kimberly Clark de has no effect on the direction of PT Bank i.e., PT Bank and Kimberly Clark go up and down completely randomly.

Pair Corralation between PT Bank and Kimberly Clark

Assuming the 90 days horizon PT Bank is expected to generate 3.45 times less return on investment than Kimberly Clark. In addition to that, PT Bank is 4.65 times more volatile than Kimberly Clark de Mexico. It trades about 0.01 of its total potential returns per unit of risk. Kimberly Clark de Mexico is currently generating about 0.12 per unit of volatility. If you would invest  691.00  in Kimberly Clark de Mexico on September 17, 2024 and sell it today you would earn a total of  25.00  from holding Kimberly Clark de Mexico or generate 3.62% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

PT Bank Rakyat  vs.  Kimberly Clark de Mexico

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 latest weak performance, the Stock's forward-looking signals remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Kimberly Clark de

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kimberly Clark de Mexico has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's primary indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with PT Bank and Kimberly Clark

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

The idea behind PT Bank Rakyat and Kimberly Clark de Mexico 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.