Correlation Between PT Bank and Roper Technologies

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

Diversification Opportunities for PT Bank and Roper Technologies

-0.31

Correlation Coefficient

PT Bank  Roper Technologies

Very good diversification

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

Pair Corralation between PT Bank and Roper Technologies

Assuming the 90 days trading horizon PT Bank Rakyat is expected to under-perform the Roper Technologies. In addition to that, PT Bank is 3.63 times more volatile than Roper Technologies. It trades about -0.01 of its total potential returns per unit of risk. Roper Technologies is currently generating about 0.05 per unit of volatility. If you would invest  50,097  in Roper Technologies on December 20, 2024 and sell it today you would earn a total of  2,283  from holding Roper Technologies or generate 4.56% 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.  Roper Technologies

PT Bank Rakyat

Risk-Adjusted Performance

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 current stock price disturbance, may contribute to mid-run losses for the stockholders.

Roper Technologies

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Roper Technologies are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Roper Technologies 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 Roper Technologies

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

The idea behind PT Bank Rakyat and Roper Technologies 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.