Correlation Between PT Bank and SolGold Plc

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

Diversification Opportunities for PT Bank and SolGold Plc

-0.04

Correlation Coefficient

PT Bank  SolGold Plc

Good diversification

The 3 months correlation between BKRKF and SolGold is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding PT Bank Rakyat and SolGold Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SolGold Plc 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 SolGold Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SolGold Plc has no effect on the direction of PT Bank i.e., PT Bank and SolGold Plc go up and down completely randomly.

Pair Corralation between PT Bank and SolGold Plc

Assuming the 90 days horizon PT Bank is expected to generate 1.4 times less return on investment than SolGold Plc. In addition to that, PT Bank is 1.45 times more volatile than SolGold Plc. It trades about 0.04 of its total potential returns per unit of risk. SolGold Plc is currently generating about 0.08 per unit of volatility. If you would invest  8.40  in SolGold Plc on December 20, 2024 and sell it today you would earn a total of  1.60  from holding SolGold Plc or generate 19.05% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	91.53%
Values	Daily Returns

PT Bank Rakyat  vs.  SolGold Plc

PT Bank Rakyat

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in PT Bank Rakyat are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak forward-looking signals, PT Bank reported solid returns over the last few months and may actually be approaching a breakup point.

SolGold Plc

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in SolGold Plc are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, SolGold Plc reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with PT Bank and SolGold Plc

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

The idea behind PT Bank Rakyat and SolGold Plc 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.