Correlation Between PT Bank and QURATE RETAIL

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

Diversification Opportunities for PT Bank and QURATE RETAIL

-0.6

Correlation Coefficient

PT Bank  QURATE RETAIL

Excellent diversification

The 3 months correlation between BYRA and QURATE is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding PT Bank Rakyat and QURATE RETAIL INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on QURATE RETAIL INC 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 QURATE RETAIL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of QURATE RETAIL INC has no effect on the direction of PT Bank i.e., PT Bank and QURATE RETAIL go up and down completely randomly.

Pair Corralation between PT Bank and QURATE RETAIL

Assuming the 90 days trading horizon PT Bank is expected to generate 8.45 times less return on investment than QURATE RETAIL. But when comparing it to its historical volatility, PT Bank Rakyat is 4.2 times less risky than QURATE RETAIL. It trades about 0.05 of its potential returns per unit of risk. QURATE RETAIL INC is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  290.00  in QURATE RETAIL INC on December 29, 2024 and sell it today you would earn a total of  310.00  from holding QURATE RETAIL INC or generate 106.9% 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.  QURATE RETAIL INC

PT Bank Rakyat

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in PT Bank Rakyat are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, PT Bank reported solid returns over the last few months and may actually be approaching a breakup point.

QURATE RETAIL INC

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in QURATE RETAIL INC are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, QURATE RETAIL reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with PT Bank and QURATE RETAIL

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

The idea behind PT Bank Rakyat and QURATE RETAIL INC 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.