Correlation Between DICKS Sporting and PT Bank

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

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

Diversification Opportunities for DICKS Sporting and PT Bank

0.04

Correlation Coefficient

DICKS Sporting  PT Bank

Significant diversification

The 3 months correlation between DICKS and BYRA is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding DICKS Sporting Goods and PT Bank Rakyat in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PT Bank Rakyat and DICKS Sporting 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 DICKS Sporting Goods 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 Rakyat has no effect on the direction of DICKS Sporting i.e., DICKS Sporting and PT Bank go up and down completely randomly.

Pair Corralation between DICKS Sporting and PT Bank

Assuming the 90 days horizon DICKS Sporting Goods is expected to generate 0.69 times more return on investment than PT Bank. However, DICKS Sporting Goods is 1.44 times less risky than PT Bank. It trades about -0.01 of its potential returns per unit of risk. PT Bank Rakyat is currently generating about -0.05 per unit of risk. If you would invest  20,575  in DICKS Sporting Goods on September 4, 2024 and sell it today you would lose (587.00) from holding DICKS Sporting Goods or give up 2.85% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.46%
Values	Daily Returns

DICKS Sporting Goods  vs.  PT Bank Rakyat

DICKS Sporting Goods

Risk-Adjusted Performance

0 of 100

Very Weak

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

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 latest fragile performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with DICKS Sporting and PT Bank

The main advantage of trading using opposite DICKS Sporting and PT Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DICKS Sporting 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 DICKS Sporting Goods and PT Bank Rakyat 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 Commodity Directory module to find actively traded commodities issued by global exchanges.