Correlation Between PT Bank and 01 Communique

Can any of the company-specific risk be diversified away by investing in both PT Bank and 01 Communique 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 01 Communique 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 01 Communique Laboratory, you can compare the effects of market volatilities on PT Bank and 01 Communique 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 01 Communique. Check out your portfolio center. Please also check ongoing floating volatility patterns of PT Bank and 01 Communique.

Diversification Opportunities for PT Bank and 01 Communique

-0.52

Correlation Coefficient

PT Bank  01 Communique

Excellent diversification

The 3 months correlation between BYRA and DFK is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding PT Bank Rakyat and 01 Communique Laboratory in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 01 Communique Laboratory 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 01 Communique. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 01 Communique Laboratory has no effect on the direction of PT Bank i.e., PT Bank and 01 Communique go up and down completely randomly.

Pair Corralation between PT Bank and 01 Communique

Assuming the 90 days trading horizon PT Bank is expected to generate 33.69 times less return on investment than 01 Communique. But when comparing it to its historical volatility, PT Bank Rakyat is 5.11 times less risky than 01 Communique. It trades about 0.06 of its potential returns per unit of risk. 01 Communique Laboratory is currently generating about 0.39 of returns per unit of risk over similar time horizon. If you would invest  3.45  in 01 Communique Laboratory on September 27, 2024 and sell it today you would earn a total of  15.55  from holding 01 Communique Laboratory or generate 450.72% return on investment over 90 days.

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

PT Bank Rakyat  vs.  01 Communique Laboratory

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 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.

01 Communique Laboratory

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in 01 Communique Laboratory are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, 01 Communique reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with PT Bank and 01 Communique

The main advantage of trading using opposite PT Bank and 01 Communique positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PT Bank position performs unexpectedly, 01 Communique 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 01 Communique will offset losses from the drop in 01 Communique's long position.

The idea behind PT Bank Rakyat and 01 Communique Laboratory 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.