Correlation Between PT Bank and VIRG NATL

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

Diversification Opportunities for PT Bank and VIRG NATL

-0.29

Correlation Coefficient

PT Bank  VIRG NATL

Very good diversification

The 3 months correlation between BOZA and VIRG is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding PT Bank Maybank and VIRG NATL BANKSH in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VIRG NATL BANKSH 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 VIRG NATL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VIRG NATL BANKSH has no effect on the direction of PT Bank i.e., PT Bank and VIRG NATL go up and down completely randomly.

Pair Corralation between PT Bank and VIRG NATL

Assuming the 90 days trading horizon PT Bank is expected to generate 8.96 times less return on investment than VIRG NATL. In addition to that, PT Bank is 1.43 times more volatile than VIRG NATL BANKSH. It trades about 0.01 of its total potential returns per unit of risk. VIRG NATL BANKSH is currently generating about 0.07 per unit of volatility. If you would invest  3,610  in VIRG NATL BANKSH on September 18, 2024 and sell it today you would earn a total of  370.00  from holding VIRG NATL BANKSH or generate 10.25% return on investment over 90 days.

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

PT Bank Maybank  vs.  VIRG NATL BANKSH

PT Bank Maybank

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PT Bank Maybank has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

VIRG NATL BANKSH

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in VIRG NATL BANKSH are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, VIRG NATL may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with PT Bank and VIRG NATL

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

The idea behind PT Bank Maybank and VIRG NATL BANKSH 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.