Correlation Between PT Bank and FIH MOBILE

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

Diversification Opportunities for PT Bank and FIH MOBILE

-0.37

Correlation Coefficient

PT Bank  FIH MOBILE

Very good diversification

The 3 months correlation between BYRA and FIH is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding PT Bank Rakyat and FIH MOBILE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FIH MOBILE 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 FIH MOBILE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FIH MOBILE has no effect on the direction of PT Bank i.e., PT Bank and FIH MOBILE go up and down completely randomly.

Pair Corralation between PT Bank and FIH MOBILE

Assuming the 90 days trading horizon PT Bank Rakyat is expected to under-perform the FIH MOBILE. In addition to that, PT Bank is 3.22 times more volatile than FIH MOBILE. It trades about -0.01 of its total potential returns per unit of risk. FIH MOBILE is currently generating about 0.22 per unit of volatility. If you would invest  9.60  in FIH MOBILE on October 6, 2024 and sell it today you would earn a total of  1.40  from holding FIH MOBILE or generate 14.58% 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.  FIH MOBILE

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.

FIH MOBILE

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in FIH MOBILE are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, FIH MOBILE may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with PT Bank and FIH MOBILE

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

The idea behind PT Bank Rakyat and FIH MOBILE 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 Global Correlations module to find global opportunities by holding instruments from different markets.