Correlation Between PT Bank and Nikon Corp

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

Diversification Opportunities for PT Bank and Nikon Corp

-0.56

Correlation Coefficient

PT Bank  Nikon Corp

Excellent diversification

The 3 months correlation between BKRKF and Nikon is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding PT Bank Rakyat and Nikon Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nikon Corp 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 Nikon Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nikon Corp has no effect on the direction of PT Bank i.e., PT Bank and Nikon Corp go up and down completely randomly.

Pair Corralation between PT Bank and Nikon Corp

Assuming the 90 days horizon PT Bank Rakyat is expected to under-perform the Nikon Corp. In addition to that, PT Bank is 2.22 times more volatile than Nikon Corp. It trades about -0.03 of its total potential returns per unit of risk. Nikon Corp is currently generating about 0.05 per unit of volatility. If you would invest  1,018  in Nikon Corp on September 14, 2024 and sell it today you would earn a total of  65.00  from holding Nikon Corp or generate 6.39% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

PT Bank Rakyat  vs.  Nikon Corp

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 fragile 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.

Nikon Corp

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Nikon Corp are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile basic indicators, Nikon Corp may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with PT Bank and Nikon Corp

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

The idea behind PT Bank Rakyat and Nikon Corp 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.