Correlation Between PT Bank and Deutsche Bank

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

Diversification Opportunities for PT Bank and Deutsche Bank

-0.61

Correlation Coefficient

PT Bank  Deutsche Bank

Excellent diversification

The 3 months correlation between BYRA and Deutsche is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding PT Bank Rakyat and Deutsche Bank Aktiengesellscha in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Deutsche Bank Aktien 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 Deutsche Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Deutsche Bank Aktien has no effect on the direction of PT Bank i.e., PT Bank and Deutsche Bank go up and down completely randomly.

Pair Corralation between PT Bank and Deutsche Bank

Assuming the 90 days trading horizon PT Bank Rakyat is expected to under-perform the Deutsche Bank. In addition to that, PT Bank is 3.3 times more volatile than Deutsche Bank Aktiengesellschaft. It trades about -0.02 of its total potential returns per unit of risk. Deutsche Bank Aktiengesellschaft is currently generating about 0.25 per unit of volatility. If you would invest  1,632  in Deutsche Bank Aktiengesellschaft on December 22, 2024 and sell it today you would earn a total of  592.00  from holding Deutsche Bank Aktiengesellschaft or generate 36.27% return on investment over 90 days.

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

PT Bank Rakyat  vs.  Deutsche Bank Aktiengesellscha

PT Bank Rakyat

Risk-Adjusted Performance

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 fragile 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.

Deutsche Bank Aktien

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Deutsche Bank Aktiengesellschaft are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady forward-looking signals, Deutsche Bank sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with PT Bank and Deutsche Bank

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

The idea behind PT Bank Rakyat and Deutsche Bank Aktiengesellschaft 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..