Correlation Between PT Bank and Peninsula Energy

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

Diversification Opportunities for PT Bank and Peninsula Energy

-0.41

Correlation Coefficient

PT Bank  Peninsula Energy

Very good diversification

The 3 months correlation between BKRKF and Peninsula is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding PT Bank Rakyat and Peninsula Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Peninsula 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 Peninsula Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Peninsula Energy has no effect on the direction of PT Bank i.e., PT Bank and Peninsula Energy go up and down completely randomly.

Pair Corralation between PT Bank and Peninsula Energy

Assuming the 90 days horizon PT Bank Rakyat is expected to under-perform the Peninsula Energy. But the pink sheet apears to be less risky and, when comparing its historical volatility, PT Bank Rakyat is 23.72 times less risky than Peninsula Energy. The pink sheet trades about -0.07 of its potential returns per unit of risk. The Peninsula Energy is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  5.20  in Peninsula Energy on September 4, 2024 and sell it today you would earn a total of  73.80  from holding Peninsula Energy or generate 1419.23% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	93.65%
Values	Daily Returns

PT Bank Rakyat  vs.  Peninsula Energy

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.

Peninsula Energy

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Peninsula Energy are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile primary indicators, Peninsula Energy reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with PT Bank and Peninsula Energy

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

The idea behind PT Bank Rakyat and Peninsula Energy 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 Transaction History module to view history of all your transactions and understand their impact on performance.