Correlation Between PT Bank and Qingdao Port

Can any of the company-specific risk be diversified away by investing in both PT Bank and Qingdao Port 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 Qingdao Port into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between PT Bank Central and Qingdao Port International, you can compare the effects of market volatilities on PT Bank and Qingdao Port 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 Qingdao Port. Check out your portfolio center. Please also check ongoing floating volatility patterns of PT Bank and Qingdao Port.

Diversification Opportunities for PT Bank and Qingdao Port

-0.39

Correlation Coefficient

PT Bank  Qingdao Port

Very good diversification

The 3 months correlation between BZG2 and Qingdao is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding PT Bank Central and Qingdao Port International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Qingdao Port Interna 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 Central are associated (or correlated) with Qingdao Port. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Qingdao Port Interna has no effect on the direction of PT Bank i.e., PT Bank and Qingdao Port go up and down completely randomly.

Pair Corralation between PT Bank and Qingdao Port

Assuming the 90 days trading horizon PT Bank is expected to generate 4.39 times less return on investment than Qingdao Port. But when comparing it to its historical volatility, PT Bank Central is 1.35 times less risky than Qingdao Port. It trades about 0.03 of its potential returns per unit of risk. Qingdao Port International is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  21.00  in Qingdao Port International on October 7, 2024 and sell it today you would earn a total of  54.00  from holding Qingdao Port International or generate 257.14% return on investment over 90 days.

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

PT Bank Central  vs.  Qingdao Port International

PT Bank Central

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in PT Bank Central are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable technical and fundamental indicators, PT Bank is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Qingdao Port Interna

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Qingdao Port International are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Qingdao Port reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with PT Bank and Qingdao Port

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

The idea behind PT Bank Central and Qingdao Port 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.