Correlation Between PT Bank and SHOPRITE HLDG
Can any of the company-specific risk be diversified away by investing in both PT Bank and SHOPRITE HLDG 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 SHOPRITE HLDG 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 SHOPRITE HLDG, you can compare the effects of market volatilities on PT Bank and SHOPRITE HLDG 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 SHOPRITE HLDG. Check out your portfolio center. Please also check ongoing floating volatility patterns of PT Bank and SHOPRITE HLDG.
Diversification Opportunities for PT Bank and SHOPRITE HLDG
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between BYRA and SHOPRITE is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding PT Bank Rakyat and SHOPRITE HLDG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SHOPRITE HLDG 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 SHOPRITE HLDG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SHOPRITE HLDG has no effect on the direction of PT Bank i.e., PT Bank and SHOPRITE HLDG go up and down completely randomly.
Pair Corralation between PT Bank and SHOPRITE HLDG
Assuming the 90 days trading horizon PT Bank Rakyat is expected to under-perform the SHOPRITE HLDG. In addition to that, PT Bank is 4.06 times more volatile than SHOPRITE HLDG. It trades about -0.02 of its total potential returns per unit of risk. SHOPRITE HLDG is currently generating about 0.02 per unit of volatility. If you would invest 1,520 in SHOPRITE HLDG on October 10, 2024 and sell it today you would earn a total of 20.00 from holding SHOPRITE HLDG or generate 1.32% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 98.31% |
Values | Daily Returns |
PT Bank Rakyat vs. SHOPRITE HLDG
Performance |
Timeline |
PT Bank Rakyat |
SHOPRITE HLDG |
PT Bank and SHOPRITE HLDG Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with PT Bank and SHOPRITE HLDG
The main advantage of trading using opposite PT Bank and SHOPRITE HLDG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PT Bank position performs unexpectedly, SHOPRITE HLDG 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 SHOPRITE HLDG will offset losses from the drop in SHOPRITE HLDG's long position.PT Bank vs. GRIFFIN MINING LTD | PT Bank vs. ARDAGH METAL PACDL 0001 | PT Bank vs. Singapore Telecommunications Limited | PT Bank vs. MCEWEN MINING INC |
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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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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