Correlation Between PT Bank and Amdocs

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

Diversification Opportunities for PT Bank and Amdocs

-0.45

Correlation Coefficient

PT Bank  Amdocs

Very good diversification

The 3 months correlation between BYRA and Amdocs is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding PT Bank Rakyat and Amdocs Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amdocs Limited 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 Amdocs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amdocs Limited has no effect on the direction of PT Bank i.e., PT Bank and Amdocs go up and down completely randomly.

Pair Corralation between PT Bank and Amdocs

Assuming the 90 days trading horizon PT Bank Rakyat is expected to under-perform the Amdocs. In addition to that, PT Bank is 7.0 times more volatile than Amdocs Limited. It trades about -0.11 of its total potential returns per unit of risk. Amdocs Limited is currently generating about -0.06 per unit of volatility. If you would invest  8,192  in Amdocs Limited on October 10, 2024 and sell it today you would lose (112.00) from holding Amdocs Limited or give up 1.37% of portfolio value over 90 days.

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

PT Bank Rakyat  vs.  Amdocs Limited

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

Amdocs Limited

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Amdocs Limited are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Amdocs is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with PT Bank and Amdocs

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

The idea behind PT Bank Rakyat and Amdocs Limited 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.