Correlation Between CPU SOFTWAREHOUSE and PT Bank

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

By analyzing existing cross correlation between CPU SOFTWAREHOUSE and PT Bank Maybank, you can compare the effects of market volatilities on CPU SOFTWAREHOUSE and PT Bank 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 CPU SOFTWAREHOUSE with a short position of PT Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of CPU SOFTWAREHOUSE and PT Bank.

Diversification Opportunities for CPU SOFTWAREHOUSE and PT Bank

0.46

Correlation Coefficient

CPU SOFTWAREHOUSE  PT Bank

Very weak diversification

The 3 months correlation between CPU and BOZA is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding CPU SOFTWAREHOUSE and PT Bank Maybank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PT Bank Maybank and CPU SOFTWAREHOUSE 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 CPU SOFTWAREHOUSE are associated (or correlated) with PT Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PT Bank Maybank has no effect on the direction of CPU SOFTWAREHOUSE i.e., CPU SOFTWAREHOUSE and PT Bank go up and down completely randomly.

Pair Corralation between CPU SOFTWAREHOUSE and PT Bank

Assuming the 90 days trading horizon CPU SOFTWAREHOUSE is expected to generate 2.16 times more return on investment than PT Bank. However, CPU SOFTWAREHOUSE is 2.16 times more volatile than PT Bank Maybank. It trades about 0.02 of its potential returns per unit of risk. PT Bank Maybank is currently generating about -0.05 per unit of risk. If you would invest  91.00  in CPU SOFTWAREHOUSE on September 18, 2024 and sell it today you would lose (2.00) from holding CPU SOFTWAREHOUSE or give up 2.2% of portfolio value over 90 days.

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

CPU SOFTWAREHOUSE  vs.  PT Bank Maybank

CPU SOFTWAREHOUSE

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CPU SOFTWAREHOUSE has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, CPU SOFTWAREHOUSE is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

PT Bank Maybank

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PT Bank Maybank has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, PT Bank is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with CPU SOFTWAREHOUSE and PT Bank

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

The idea behind CPU SOFTWAREHOUSE and PT Bank Maybank 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.