Correlation Between PT Bank and Nickel Creek

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

Diversification Opportunities for PT Bank and Nickel Creek

0.66

Correlation Coefficient

PT Bank  Nickel Creek

Poor diversification

The 3 months correlation between BKRKF and Nickel is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding PT Bank Rakyat and Nickel Creek Platinum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nickel Creek Platinum 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 Nickel Creek. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nickel Creek Platinum has no effect on the direction of PT Bank i.e., PT Bank and Nickel Creek go up and down completely randomly.

Pair Corralation between PT Bank and Nickel Creek

Assuming the 90 days horizon PT Bank Rakyat is expected to under-perform the Nickel Creek. But the pink sheet apears to be less risky and, when comparing its historical volatility, PT Bank Rakyat is 1.14 times less risky than Nickel Creek. The pink sheet trades about -0.07 of its potential returns per unit of risk. The Nickel Creek Platinum is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest  80.00  in Nickel Creek Platinum on September 3, 2024 and sell it today you would lose (23.00) from holding Nickel Creek Platinum or give up 28.75% of portfolio value over 90 days.

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

PT Bank Rakyat  vs.  Nickel Creek Platinum

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 fragile 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.

Nickel Creek Platinum

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nickel Creek Platinum has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's fundamental indicators 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.

Pair Trading with PT Bank and Nickel Creek

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

The idea behind PT Bank Rakyat and Nickel Creek Platinum 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.