Correlation Between PT Bank and Origin Energy

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

Diversification Opportunities for PT Bank and Origin Energy

-0.7

Correlation Coefficient

PT Bank  Origin Energy

Excellent diversification

The 3 months correlation between BKRKF and Origin is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding PT Bank Rakyat and Origin Energy Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Origin Energy 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 Origin Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Origin Energy has no effect on the direction of PT Bank i.e., PT Bank and Origin Energy go up and down completely randomly.

Pair Corralation between PT Bank and Origin Energy

Assuming the 90 days horizon PT Bank is expected to generate 2.74 times less return on investment than Origin Energy. In addition to that, PT Bank is 2.26 times more volatile than Origin Energy Ltd. It trades about 0.01 of its total potential returns per unit of risk. Origin Energy Ltd is currently generating about 0.09 per unit of volatility. If you would invest  461.00  in Origin Energy Ltd on September 4, 2024 and sell it today you would earn a total of  258.00  from holding Origin Energy Ltd or generate 55.97% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	94.25%
Values	Daily Returns

PT Bank Rakyat  vs.  Origin Energy Ltd

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.

Origin Energy

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Origin Energy Ltd are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak technical and fundamental indicators, Origin Energy may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with PT Bank and Origin Energy

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

The idea behind PT Bank Rakyat and Origin Energy Ltd 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.