Correlation Between PT Bank and Nichirei

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

Diversification Opportunities for PT Bank and Nichirei

-0.6

Correlation Coefficient

PT Bank  Nichirei

Excellent diversification

The 3 months correlation between BKRKF and Nichirei is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding PT Bank Rakyat and Nichirei in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nichirei 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 Nichirei. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nichirei has no effect on the direction of PT Bank i.e., PT Bank and Nichirei go up and down completely randomly.

Pair Corralation between PT Bank and Nichirei

If you would invest  27.00  in PT Bank Rakyat on September 21, 2024 and sell it today you would lose (1.00) from holding PT Bank Rakyat or give up 3.7% of portfolio value over 90 days.

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

PT Bank Rakyat  vs.  Nichirei

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.

Nichirei

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Nichirei are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong technical and fundamental indicators, Nichirei is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with PT Bank and Nichirei

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

The idea behind PT Bank Rakyat and Nichirei 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.