Correlation Between PT Bank and Addtech AB

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

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

Diversification Opportunities for PT Bank and Addtech AB

-0.17

Correlation Coefficient

PT Bank  Addtech AB

Good diversification

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

Pair Corralation between PT Bank and Addtech AB

Assuming the 90 days trading horizon PT Bank Rakyat is expected to under-perform the Addtech AB. In addition to that, PT Bank is 3.0 times more volatile than Addtech AB. It trades about -0.01 of its total potential returns per unit of risk. Addtech AB is currently generating about 0.02 per unit of volatility. If you would invest  2,626  in Addtech AB on October 6, 2024 and sell it today you would earn a total of  12.00  from holding Addtech AB or generate 0.46% return on investment over 90 days.

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

PT Bank Rakyat  vs.  Addtech AB

PT Bank Rakyat

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PT Bank Rakyat 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.

Addtech AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Addtech AB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Addtech AB 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 Addtech AB

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

The idea behind PT Bank Rakyat and Addtech AB 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.