Correlation Between PT Bank and Tesla

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

Diversification Opportunities for PT Bank and Tesla

-0.73

Correlation Coefficient

PT Bank  Tesla

Pay attention - limited upside

The 3 months correlation between BYRA and Tesla is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding PT Bank Rakyat and Tesla Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tesla Inc 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 Tesla. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tesla Inc has no effect on the direction of PT Bank i.e., PT Bank and Tesla go up and down completely randomly.

Pair Corralation between PT Bank and Tesla

Assuming the 90 days trading horizon PT Bank is expected to generate 4.18 times less return on investment than Tesla. In addition to that, PT Bank is 1.24 times more volatile than Tesla Inc. It trades about 0.02 of its total potential returns per unit of risk. Tesla Inc is currently generating about 0.09 per unit of volatility. If you would invest  11,270  in Tesla Inc on October 5, 2024 and sell it today you would earn a total of  26,000  from holding Tesla Inc or generate 230.7% 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.  Tesla Inc

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.

Tesla Inc

Risk-Adjusted Performance

0 of 100

Solid

Over the last 90 days Tesla Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively fragile basic indicators, Tesla unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with PT Bank and Tesla

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

The idea behind PT Bank Rakyat and Tesla Inc 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.