Correlation Between GEAR4MUSIC (HLDGS) and PT Bank

Can any of the company-specific risk be diversified away by investing in both GEAR4MUSIC (HLDGS) 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 GEAR4MUSIC (HLDGS) and PT Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between GEAR4MUSIC LS 10 and PT Bank Rakyat, you can compare the effects of market volatilities on GEAR4MUSIC (HLDGS) 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 GEAR4MUSIC (HLDGS) with a short position of PT Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of GEAR4MUSIC (HLDGS) and PT Bank.

Diversification Opportunities for GEAR4MUSIC (HLDGS) and PT Bank

0.16

Correlation Coefficient

GEAR4MUSIC (HLDGS)  PT Bank

Average diversification

The 3 months correlation between GEAR4MUSIC and BYRA is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding GEAR4MUSIC LS 10 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 GEAR4MUSIC (HLDGS) 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 GEAR4MUSIC LS 10 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 GEAR4MUSIC (HLDGS) i.e., GEAR4MUSIC (HLDGS) and PT Bank go up and down completely randomly.

Pair Corralation between GEAR4MUSIC (HLDGS) and PT Bank

Assuming the 90 days horizon GEAR4MUSIC LS 10 is expected to generate 0.42 times more return on investment than PT Bank. However, GEAR4MUSIC LS 10 is 2.36 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 -0.12 per unit of risk. If you would invest  193.00  in GEAR4MUSIC LS 10 on October 8, 2024 and sell it today you would lose (2.00) from holding GEAR4MUSIC LS 10 or give up 1.04% of portfolio value over 90 days.

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

GEAR4MUSIC LS 10  vs.  PT Bank Rakyat

GEAR4MUSIC (HLDGS)

Risk-Adjusted Performance

2 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in GEAR4MUSIC LS 10 are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, GEAR4MUSIC (HLDGS) is not utilizing all of its potentials. The newest 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. Despite latest unsteady 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 GEAR4MUSIC (HLDGS) and PT Bank

The main advantage of trading using opposite GEAR4MUSIC (HLDGS) and PT Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GEAR4MUSIC (HLDGS) 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 GEAR4MUSIC LS 10 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.