Correlation Between PT Bank and QUICKSTEP HLDGS

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

Diversification Opportunities for PT Bank and QUICKSTEP HLDGS

0.2

Correlation Coefficient

PT Bank  QUICKSTEP HLDGS

Modest diversification

The 3 months correlation between BYRA and QUICKSTEP is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding PT Bank Rakyat and QUICKSTEP HLDGS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on QUICKSTEP HLDGS 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 QUICKSTEP HLDGS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of QUICKSTEP HLDGS has no effect on the direction of PT Bank i.e., PT Bank and QUICKSTEP HLDGS go up and down completely randomly.

Pair Corralation between PT Bank and QUICKSTEP HLDGS

Assuming the 90 days trading horizon PT Bank Rakyat is expected to generate 2.91 times more return on investment than QUICKSTEP HLDGS. However, PT Bank is 2.91 times more volatile than QUICKSTEP HLDGS. It trades about 0.05 of its potential returns per unit of risk. QUICKSTEP HLDGS is currently generating about 0.01 per unit of risk. If you would invest  22.00  in PT Bank Rakyat on December 30, 2024 and sell it today you would earn a total of  2.00  from holding PT Bank Rakyat or generate 9.09% return on investment over 90 days.

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

PT Bank Rakyat  vs.  QUICKSTEP HLDGS

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.

QUICKSTEP HLDGS

Risk-Adjusted Performance

Very Weak

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

Pair Trading with PT Bank and QUICKSTEP HLDGS

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

The idea behind PT Bank Rakyat and QUICKSTEP HLDGS 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.