Correlation Between First Bankers and PT Bank

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

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

Diversification Opportunities for First Bankers and PT Bank

-0.57

Correlation Coefficient

First Bankers  PT Bank

Excellent diversification

The 3 months correlation between First and PBCRF is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding First Bankers Trustshares and PT Bank Central in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PT Bank Central and First Bankers 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 First Bankers Trustshares 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 Central has no effect on the direction of First Bankers i.e., First Bankers and PT Bank go up and down completely randomly.

Pair Corralation between First Bankers and PT Bank

Given the investment horizon of 90 days First Bankers Trustshares is expected to generate 0.32 times more return on investment than PT Bank. However, First Bankers Trustshares is 3.17 times less risky than PT Bank. It trades about 0.08 of its potential returns per unit of risk. PT Bank Central is currently generating about -0.04 per unit of risk. If you would invest  1,600  in First Bankers Trustshares on October 5, 2024 and sell it today you would earn a total of  77.00  from holding First Bankers Trustshares or generate 4.81% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.08%
Values	Daily Returns

First Bankers Trustshares  vs.  PT Bank Central

First Bankers Trustshares

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in First Bankers Trustshares are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, First Bankers is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

PT Bank Central

Risk-Adjusted Performance

0 of 100

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 latest weak performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with First Bankers and PT Bank

The main advantage of trading using opposite First Bankers and PT Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Bankers 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 First Bankers Trustshares and PT Bank Central 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.