Correlation Between PT Bank and DSV AS

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

Diversification Opportunities for PT Bank and DSV AS

-0.42

Correlation Coefficient

PT Bank  DSV AS

Very good diversification

The 3 months correlation between BYRA and DSV is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding PT Bank Rakyat and DSV AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DSV AS 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 DSV AS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DSV AS has no effect on the direction of PT Bank i.e., PT Bank and DSV AS go up and down completely randomly.

Pair Corralation between PT Bank and DSV AS

Assuming the 90 days trading horizon PT Bank Rakyat is expected to under-perform the DSV AS. In addition to that, PT Bank is 7.49 times more volatile than DSV AS. It trades about -0.04 of its total potential returns per unit of risk. DSV AS is currently generating about 0.05 per unit of volatility. If you would invest  20,450  in DSV AS on October 8, 2024 and sell it today you would earn a total of  140.00  from holding DSV AS or generate 0.68% 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.  DSV AS

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.

DSV AS

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in DSV AS are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, DSV AS is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with PT Bank and DSV AS

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

The idea behind PT Bank Rakyat and DSV AS 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.