Correlation Between PT Bank and Xcel Energy

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

Diversification Opportunities for PT Bank and Xcel Energy

-0.31

Correlation Coefficient

PT Bank  Xcel Energy

Very good diversification

The 3 months correlation between BYRA and Xcel is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding PT Bank Rakyat and Xcel Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xcel Energy 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 Xcel Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xcel Energy has no effect on the direction of PT Bank i.e., PT Bank and Xcel Energy go up and down completely randomly.

Pair Corralation between PT Bank and Xcel Energy

Assuming the 90 days trading horizon PT Bank Rakyat is expected to generate 4.7 times more return on investment than Xcel Energy. However, PT Bank is 4.7 times more volatile than Xcel Energy. It trades about 0.02 of its potential returns per unit of risk. Xcel Energy is currently generating about 0.0 per unit of risk. If you would invest  23.00  in PT Bank Rakyat on December 25, 2024 and sell it today you would lose (1.00) from holding PT Bank Rakyat or give up 4.35% of portfolio value over 90 days.

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

PT Bank Rakyat  vs.  Xcel Energy

PT Bank Rakyat

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in PT Bank Rakyat are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, PT Bank may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Xcel Energy

Risk-Adjusted Performance

Very Weak

Over the last 90 days Xcel Energy has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Xcel Energy is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with PT Bank and Xcel Energy

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

The idea behind PT Bank Rakyat and Xcel Energy 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.