Correlation Between PT Bank and COMPUTER MODELLING

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

Diversification Opportunities for PT Bank and COMPUTER MODELLING

-0.59

Correlation Coefficient

PT Bank  COMPUTER MODELLING

Excellent diversification

The 3 months correlation between BYRA and COMPUTER is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding PT Bank Rakyat and COMPUTER MODELLING in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on COMPUTER MODELLING 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 COMPUTER MODELLING. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of COMPUTER MODELLING has no effect on the direction of PT Bank i.e., PT Bank and COMPUTER MODELLING go up and down completely randomly.

Pair Corralation between PT Bank and COMPUTER MODELLING

Assuming the 90 days trading horizon PT Bank Rakyat is expected to generate 39.04 times more return on investment than COMPUTER MODELLING. However, PT Bank is 39.04 times more volatile than COMPUTER MODELLING. It trades about 0.0 of its potential returns per unit of risk. COMPUTER MODELLING is currently generating about 0.07 per unit of risk. If you would invest  22.00  in PT Bank Rakyat on December 23, 2024 and sell it today you would lose (3.00) from holding PT Bank Rakyat or give up 13.64% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.36%
Values	Daily Returns

PT Bank Rakyat  vs.  COMPUTER MODELLING

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. In spite of comparatively stable basic indicators, PT Bank is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

COMPUTER MODELLING

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in COMPUTER MODELLING are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound forward-looking indicators, COMPUTER MODELLING 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 COMPUTER MODELLING

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

The idea behind PT Bank Rakyat and COMPUTER MODELLING 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.