Correlation Between PT Bank and Regions Financial

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

Diversification Opportunities for PT Bank and Regions Financial

0.51

Correlation Coefficient

PT Bank  Regions Financial

Very weak diversification

The 3 months correlation between BOZA and Regions is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding PT Bank Maybank and Regions Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Regions Financial 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 Regions Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Regions Financial has no effect on the direction of PT Bank i.e., PT Bank and Regions Financial go up and down completely randomly.

Pair Corralation between PT Bank and Regions Financial

Assuming the 90 days trading horizon PT Bank Maybank is expected to generate 3.38 times more return on investment than Regions Financial. However, PT Bank is 3.38 times more volatile than Regions Financial. It trades about -0.03 of its potential returns per unit of risk. Regions Financial is currently generating about -0.13 per unit of risk. If you would invest  1.25  in PT Bank Maybank on December 2, 2024 and sell it today you would lose (0.20) from holding PT Bank Maybank or give up 16.0% of portfolio value over 90 days.

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

PT Bank Maybank  vs.  Regions Financial

PT Bank Maybank

Risk-Adjusted Performance

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 latest uncertain performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Regions Financial

Risk-Adjusted Performance

Very Weak

Over the last 90 days Regions Financial has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with PT Bank and Regions Financial

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

The idea behind PT Bank Maybank and Regions 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.