Correlation Between PT Bank and Pfizer

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

Diversification Opportunities for PT Bank and Pfizer

0.15

Correlation Coefficient

PT Bank  Pfizer

Average diversification

The 3 months correlation between BYRA and Pfizer is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding PT Bank Rakyat and Pfizer Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pfizer 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 Pfizer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pfizer Inc has no effect on the direction of PT Bank i.e., PT Bank and Pfizer go up and down completely randomly.

Pair Corralation between PT Bank and Pfizer

Assuming the 90 days trading horizon PT Bank Rakyat is expected to generate 3.14 times more return on investment than Pfizer. However, PT Bank is 3.14 times more volatile than Pfizer Inc. It trades about 0.0 of its potential returns per unit of risk. Pfizer Inc is currently generating about -0.03 per unit of risk. If you would invest  29.00  in PT Bank Rakyat on October 24, 2024 and sell it today you would lose (2.00) from holding PT Bank Rakyat or give up 6.9% of portfolio value over 90 days.

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

PT Bank Rakyat  vs.  Pfizer Inc

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 nearly stable basic indicators, PT Bank is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pfizer Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pfizer Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Pfizer is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with PT Bank and Pfizer

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

The idea behind PT Bank Rakyat and Pfizer 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.