Correlation Between PT Bank and Industrial

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

Diversification Opportunities for PT Bank and Industrial

-0.67

Correlation Coefficient

PT Bank  Industrial

Excellent diversification

The 3 months correlation between BZG2 and Industrial is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding PT Bank Central and Industrial and Commercial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Industrial and Commercial 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 Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Industrial and Commercial has no effect on the direction of PT Bank i.e., PT Bank and Industrial go up and down completely randomly.

Pair Corralation between PT Bank and Industrial

Assuming the 90 days trading horizon PT Bank Central is expected to under-perform the Industrial. But the stock apears to be less risky and, when comparing its historical volatility, PT Bank Central is 1.01 times less risky than Industrial. The stock trades about -0.12 of its potential returns per unit of risk. The Industrial and Commercial is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  46.00  in Industrial and Commercial on December 21, 2024 and sell it today you would earn a total of  19.00  from holding Industrial and Commercial or generate 41.3% return on investment over 90 days.

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

PT Bank Central  vs.  Industrial and Commercial

PT Bank Central

Risk-Adjusted Performance

Very Weak

Over the last 90 days PT Bank Central has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's technical and fundamental indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Industrial and Commercial

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Industrial and Commercial are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Industrial reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with PT Bank and Industrial

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

The idea behind PT Bank Central and Industrial and Commercial 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.