Correlation Between PT Bank and Carnegie Clean

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

Diversification Opportunities for PT Bank and Carnegie Clean

0.15

Correlation Coefficient

PT Bank  Carnegie Clean

Average diversification

The 3 months correlation between BOZA and Carnegie is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding PT Bank Maybank and Carnegie Clean Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carnegie Clean Energy 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 Carnegie Clean. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carnegie Clean Energy has no effect on the direction of PT Bank i.e., PT Bank and Carnegie Clean go up and down completely randomly.

Pair Corralation between PT Bank and Carnegie Clean

Assuming the 90 days trading horizon PT Bank Maybank is expected to generate 0.69 times more return on investment than Carnegie Clean. However, PT Bank Maybank is 1.44 times less risky than Carnegie Clean. It trades about 0.02 of its potential returns per unit of risk. Carnegie Clean Energy is currently generating about -0.01 per unit of risk. If you would invest  1.15  in PT Bank Maybank on December 24, 2024 and sell it today you would earn a total of  0.00  from holding PT Bank Maybank or generate 0.0% return on investment over 90 days.

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

PT Bank Maybank  vs.  Carnegie Clean Energy

PT Bank Maybank

Risk-Adjusted Performance

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.

Carnegie Clean Energy

Risk-Adjusted Performance

Very Weak

Over the last 90 days Carnegie Clean Energy has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable primary indicators, Carnegie Clean is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with PT Bank and Carnegie Clean

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

The idea behind PT Bank Maybank and Carnegie Clean Energy 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.