Correlation Between PT Bank and Link Reservations

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

Diversification Opportunities for PT Bank and Link Reservations

0.0

Correlation Coefficient

PT Bank  Link Reservations

Pay attention - limited upside

The 3 months correlation between BKRKF and Link is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding PT Bank Rakyat and Link Reservations in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Link Reservations 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 Link Reservations. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Link Reservations has no effect on the direction of PT Bank i.e., PT Bank and Link Reservations go up and down completely randomly.

Pair Corralation between PT Bank and Link Reservations

Assuming the 90 days horizon PT Bank Rakyat is expected to generate 1.52 times more return on investment than Link Reservations. However, PT Bank is 1.52 times more volatile than Link Reservations. It trades about 0.05 of its potential returns per unit of risk. Link Reservations is currently generating about -0.13 per unit of risk. If you would invest  24.00  in PT Bank Rakyat on November 29, 2024 and sell it today you would earn a total of  0.00  from holding PT Bank Rakyat or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	86.44%
Values	Daily Returns

PT Bank Rakyat  vs.  Link Reservations

PT Bank Rakyat

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in PT Bank Rakyat are ranked lower than 3 (%) 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.

Link Reservations

Risk-Adjusted Performance

Very Weak

Over the last 90 days Link Reservations has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in March 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with PT Bank and Link Reservations

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

The idea behind PT Bank Rakyat and Link Reservations 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.