Correlation Between Information Services and PT Bank

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

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

Diversification Opportunities for Information Services and PT Bank

-0.12

Correlation Coefficient

Information Services  PT Bank

Good diversification

The 3 months correlation between Information and BZG2 is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Information Services Internati 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 Information Services 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 Information Services International Dentsu 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 Information Services i.e., Information Services and PT Bank go up and down completely randomly.

Pair Corralation between Information Services and PT Bank

Assuming the 90 days horizon Information Services International Dentsu is expected to under-perform the PT Bank. But the stock apears to be less risky and, when comparing its historical volatility, Information Services International Dentsu is 2.8 times less risky than PT Bank. The stock trades about -0.14 of its potential returns per unit of risk. The PT Bank Central is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  60.00  in PT Bank Central on October 26, 2024 and sell it today you would lose (2.00) from holding PT Bank Central or give up 3.33% of portfolio value over 90 days.

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

Information Services Internati  vs.  PT Bank Central

Information Services

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Information Services International Dentsu are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Information Services may actually be approaching a critical reversion point that can send shares even higher in February 2025.

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 nearly stable technical and fundamental 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 Information Services and PT Bank

The main advantage of trading using opposite Information Services and PT Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Information Services 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 Information Services International Dentsu 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.