Correlation Between HV Bancorp and PT Bank

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

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

Diversification Opportunities for HV Bancorp and PT Bank

0.0

Correlation Coefficient

HV Bancorp  PT Bank

Pay attention - limited upside

The 3 months correlation between HVBC and BKRKF is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding HV Bancorp 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 HV Bancorp 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 HV Bancorp 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 HV Bancorp i.e., HV Bancorp and PT Bank go up and down completely randomly.

Pair Corralation between HV Bancorp and PT Bank

Given the investment horizon of 90 days HV Bancorp is expected to generate 0.43 times more return on investment than PT Bank. However, HV Bancorp is 2.34 times less risky than PT Bank. It trades about 0.05 of its potential returns per unit of risk. PT Bank Rakyat is currently generating about 0.01 per unit of risk. If you would invest  3,186  in HV Bancorp on October 3, 2024 and sell it today you would earn a total of  274.00  from holding HV Bancorp or generate 8.6% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	22.92%
Values	Daily Returns

HV Bancorp  vs.  PT Bank Rakyat

HV Bancorp

Risk-Adjusted Performance

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Very Weak

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

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 fragile performance, the Stock's forward-looking signals 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 HV Bancorp and PT Bank

The main advantage of trading using opposite HV Bancorp and PT Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HV Bancorp 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 HV Bancorp 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.