Correlation Between Bintang Oto and Pacific Strategic

Can any of the company-specific risk be diversified away by investing in both Bintang Oto and Pacific Strategic 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 Bintang Oto and Pacific Strategic into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Bintang Oto Global and Pacific Strategic Financial, you can compare the effects of market volatilities on Bintang Oto and Pacific Strategic 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 Bintang Oto with a short position of Pacific Strategic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bintang Oto and Pacific Strategic.

Diversification Opportunities for Bintang Oto and Pacific Strategic

0.56

Correlation Coefficient

Bintang Oto  Pacific Strategic

Very weak diversification

The 3 months correlation between Bintang and Pacific is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Bintang Oto Global and Pacific Strategic Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pacific Strategic and Bintang Oto 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 Bintang Oto Global are associated (or correlated) with Pacific Strategic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pacific Strategic has no effect on the direction of Bintang Oto i.e., Bintang Oto and Pacific Strategic go up and down completely randomly.

Pair Corralation between Bintang Oto and Pacific Strategic

Assuming the 90 days trading horizon Bintang Oto is expected to generate 1.04 times less return on investment than Pacific Strategic. In addition to that, Bintang Oto is 2.84 times more volatile than Pacific Strategic Financial. It trades about 0.06 of its total potential returns per unit of risk. Pacific Strategic Financial is currently generating about 0.18 per unit of volatility. If you would invest  103,500  in Pacific Strategic Financial on November 20, 2024 and sell it today you would earn a total of  10,000  from holding Pacific Strategic Financial or generate 9.66% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Bintang Oto Global  vs.  Pacific Strategic Financial

Bintang Oto Global

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Bintang Oto Global are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Bintang Oto may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Pacific Strategic

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Pacific Strategic Financial are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Pacific Strategic may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Pair Trading with Bintang Oto and Pacific Strategic

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

The idea behind Bintang Oto Global and Pacific Strategic Financial 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.