Correlation Between PT Bank and COMBA TELECOM

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

Diversification Opportunities for PT Bank and COMBA TELECOM

-0.71

Correlation Coefficient

PT Bank  COMBA TELECOM

Pay attention - limited upside

The 3 months correlation between BYRA and COMBA is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding PT Bank Rakyat and COMBA TELECOM SYST in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on COMBA TELECOM SYST 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 COMBA TELECOM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of COMBA TELECOM SYST has no effect on the direction of PT Bank i.e., PT Bank and COMBA TELECOM go up and down completely randomly.

Pair Corralation between PT Bank and COMBA TELECOM

Assuming the 90 days trading horizon PT Bank is expected to generate 5.5 times less return on investment than COMBA TELECOM. In addition to that, PT Bank is 2.04 times more volatile than COMBA TELECOM SYST. It trades about 0.01 of its total potential returns per unit of risk. COMBA TELECOM SYST is currently generating about 0.17 per unit of volatility. If you would invest  15.00  in COMBA TELECOM SYST on December 30, 2024 and sell it today you would earn a total of  6.00  from holding COMBA TELECOM SYST or generate 40.0% 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.  COMBA TELECOM SYST

PT Bank Rakyat

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in PT Bank Rakyat are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, PT Bank may actually be approaching a critical reversion point that can send shares even higher in April 2025.

COMBA TELECOM SYST

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in COMBA TELECOM SYST are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, COMBA TELECOM unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with PT Bank and COMBA TELECOM

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

The idea behind PT Bank Rakyat and COMBA TELECOM SYST 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.