Correlation Between PT Bank and Vista Outdoor

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

Diversification Opportunities for PT Bank and Vista Outdoor

0.52

Correlation Coefficient

PT Bank  Vista Outdoor

Very weak diversification

The 3 months correlation between BKRKF and Vista is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding PT Bank Rakyat and Vista Outdoor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vista Outdoor 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 Vista Outdoor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vista Outdoor has no effect on the direction of PT Bank i.e., PT Bank and Vista Outdoor go up and down completely randomly.

Pair Corralation between PT Bank and Vista Outdoor

Assuming the 90 days horizon PT Bank Rakyat is expected to under-perform the Vista Outdoor. In addition to that, PT Bank is 3.89 times more volatile than Vista Outdoor. It trades about -0.02 of its total potential returns per unit of risk. Vista Outdoor is currently generating about 0.14 per unit of volatility. If you would invest  3,641  in Vista Outdoor on October 8, 2024 and sell it today you would earn a total of  822.00  from holding Vista Outdoor or generate 22.58% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	80.0%
Values	Daily Returns

PT Bank Rakyat  vs.  Vista Outdoor

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.

Vista Outdoor

Risk-Adjusted Performance

0 of 100

Good

Over the last 90 days Vista Outdoor has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Vista Outdoor is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with PT Bank and Vista Outdoor

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

The idea behind PT Bank Rakyat and Vista Outdoor 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.

Check out your portfolio center.

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 Global Correlations module to find global opportunities by holding instruments from different markets.