Correlation Between PT Bank and Triad Business

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

Diversification Opportunities for PT Bank and Triad Business

0.55

Correlation Coefficient

PT Bank  Triad Business

Very weak diversification

The 3 months correlation between BKRKF and Triad is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding PT Bank Rakyat and Triad Business Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Triad Business Bank 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 Triad Business. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Triad Business Bank has no effect on the direction of PT Bank i.e., PT Bank and Triad Business go up and down completely randomly.

Pair Corralation between PT Bank and Triad Business

Assuming the 90 days horizon PT Bank Rakyat is expected to under-perform the Triad Business. In addition to that, PT Bank is 3.87 times more volatile than Triad Business Bank. It trades about -0.03 of its total potential returns per unit of risk. Triad Business Bank is currently generating about -0.03 per unit of volatility. If you would invest  525.00  in Triad Business Bank on September 13, 2024 and sell it today you would lose (18.00) from holding Triad Business Bank or give up 3.43% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

PT Bank Rakyat  vs.  Triad Business Bank

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.

Triad Business Bank

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Triad Business Bank has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental drivers, Triad Business is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with PT Bank and Triad Business

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

The idea behind PT Bank Rakyat and Triad Business Bank 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.