Correlation Between PT Bank and Volkswagen
Can any of the company-specific risk be diversified away by investing in both PT Bank and Volkswagen 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 Volkswagen 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 Volkswagen AG, you can compare the effects of market volatilities on PT Bank and Volkswagen 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 Volkswagen. Check out your portfolio center. Please also check ongoing floating volatility patterns of PT Bank and Volkswagen.
Diversification Opportunities for PT Bank and Volkswagen
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between BYRA and Volkswagen is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding PT Bank Rakyat and Volkswagen AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Volkswagen AG 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 Volkswagen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Volkswagen AG has no effect on the direction of PT Bank i.e., PT Bank and Volkswagen go up and down completely randomly.
Pair Corralation between PT Bank and Volkswagen
Assuming the 90 days trading horizon PT Bank Rakyat is expected to generate 3.55 times more return on investment than Volkswagen. However, PT Bank is 3.55 times more volatile than Volkswagen AG. It trades about 0.05 of its potential returns per unit of risk. Volkswagen AG is currently generating about 0.08 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 Against |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
PT Bank Rakyat vs. Volkswagen AG
Performance |
Timeline |
PT Bank Rakyat |
Volkswagen AG |
PT Bank and Volkswagen Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with PT Bank and Volkswagen
The main advantage of trading using opposite PT Bank and Volkswagen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PT Bank position performs unexpectedly, Volkswagen 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 Volkswagen will offset losses from the drop in Volkswagen's long position.PT Bank vs. MARKET VECTR RETAIL | PT Bank vs. Globe Trade Centre | PT Bank vs. FLOW TRADERS LTD | PT Bank vs. MOVIE GAMES SA |
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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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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