Correlation Between PT Bank and AULT Old

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

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

Diversification Opportunities for PT Bank and AULT Old

0.67

Correlation Coefficient

PT Bank  AULT Old

Poor diversification

The 3 months correlation between PBCRF and AULT is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding PT Bank Central and AULT Old in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AULT Old and PT Bank 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 PT Bank Central are associated (or correlated) with AULT Old. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AULT Old has no effect on the direction of PT Bank i.e., PT Bank and AULT Old go up and down completely randomly.

Pair Corralation between PT Bank and AULT Old

Assuming the 90 days horizon PT Bank Central is expected to generate 0.46 times more return on investment than AULT Old. However, PT Bank Central is 2.2 times less risky than AULT Old. It trades about 0.02 of its potential returns per unit of risk. AULT Old is currently generating about -0.2 per unit of risk. If you would invest  53.00  in PT Bank Central on October 11, 2024 and sell it today you would earn a total of  6.00  from holding PT Bank Central or generate 11.32% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	84.8%
Values	Daily Returns

PT Bank Central  vs.  AULT Old

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.

AULT Old

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AULT Old has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable essential indicators, AULT Old is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with PT Bank and AULT Old

The main advantage of trading using opposite PT Bank and AULT Old positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PT Bank position performs unexpectedly, AULT Old 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 AULT Old will offset losses from the drop in AULT Old's long position.

The idea behind PT Bank Central and AULT Old 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 Transaction History module to view history of all your transactions and understand their impact on performance.