Correlation Between PT Bank and Marriott International

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

Diversification Opportunities for PT Bank and Marriott International

-0.61

Correlation Coefficient

PT Bank  Marriott International

Excellent diversification

The 3 months correlation between BYRA and Marriott is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding PT Bank Rakyat and Marriott International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marriott International 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 Marriott International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marriott International has no effect on the direction of PT Bank i.e., PT Bank and Marriott International go up and down completely randomly.

Pair Corralation between PT Bank and Marriott International

Assuming the 90 days trading horizon PT Bank Rakyat is expected to under-perform the Marriott International. In addition to that, PT Bank is 6.07 times more volatile than Marriott International. It trades about -0.11 of its total potential returns per unit of risk. Marriott International is currently generating about -0.15 per unit of volatility. If you would invest  27,620  in Marriott International on October 10, 2024 and sell it today you would lose (1,035) from holding Marriott International or give up 3.75% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	94.44%
Values	Daily Returns

PT Bank Rakyat  vs.  Marriott International

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.

Marriott International

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Marriott International are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Marriott International may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with PT Bank and Marriott International

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

The idea behind PT Bank Rakyat and Marriott International 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.

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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.