Correlation Between Identiv and PT Bank

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

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

Diversification Opportunities for Identiv and PT Bank

0.41

Correlation Coefficient

Identiv  PT Bank

Very weak diversification

The 3 months correlation between Identiv and BYRA is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Identiv 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 Identiv 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 Identiv 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 Identiv i.e., Identiv and PT Bank go up and down completely randomly.

Pair Corralation between Identiv and PT Bank

Assuming the 90 days trading horizon Identiv is expected to under-perform the PT Bank. But the stock apears to be less risky and, when comparing its historical volatility, Identiv is 1.92 times less risky than PT Bank. The stock trades about -0.05 of its potential returns per unit of risk. The PT Bank Rakyat is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  25.00  in PT Bank Rakyat on December 20, 2024 and sell it today you would lose (4.00) from holding PT Bank Rakyat or give up 16.0% of portfolio value over 90 days.

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

Identiv  vs.  PT Bank Rakyat

Identiv

Risk-Adjusted Performance

Very Weak

Over the last 90 days Identiv has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain 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.

PT Bank Rakyat

Risk-Adjusted Performance

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 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 Identiv and PT Bank

The main advantage of trading using opposite Identiv and PT Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Identiv 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 Identiv 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.