Correlation Between PT Bank and Pure Storage

Can any of the company-specific risk be diversified away by investing in both PT Bank and Pure Storage 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 Pure Storage into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between PT Bank Maybank and Pure Storage, you can compare the effects of market volatilities on PT Bank and Pure Storage 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 Pure Storage. Check out your portfolio center. Please also check ongoing floating volatility patterns of PT Bank and Pure Storage.

Diversification Opportunities for PT Bank and Pure Storage

-0.17

Correlation Coefficient

PT Bank  Pure Storage

Good diversification

The 3 months correlation between BOZA and Pure is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding PT Bank Maybank and Pure Storage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pure Storage 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 Maybank are associated (or correlated) with Pure Storage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pure Storage has no effect on the direction of PT Bank i.e., PT Bank and Pure Storage go up and down completely randomly.

Pair Corralation between PT Bank and Pure Storage

Assuming the 90 days trading horizon PT Bank is expected to generate 6.09 times less return on investment than Pure Storage. In addition to that, PT Bank is 1.07 times more volatile than Pure Storage. It trades about 0.02 of its total potential returns per unit of risk. Pure Storage is currently generating about 0.13 per unit of volatility. If you would invest  4,398  in Pure Storage on September 14, 2024 and sell it today you would earn a total of  1,450  from holding Pure Storage or generate 32.97% return on investment over 90 days.

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

PT Bank Maybank  vs.  Pure Storage

PT Bank Maybank

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in PT Bank Maybank are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, PT Bank is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pure Storage

Risk-Adjusted Performance

10 of 100

OK

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

Pair Trading with PT Bank and Pure Storage

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

The idea behind PT Bank Maybank and Pure Storage 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.