Correlation Between PT Bank and CaixaBank

Can any of the company-specific risk be diversified away by investing in both PT Bank and CaixaBank 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 CaixaBank 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 CaixaBank SA, you can compare the effects of market volatilities on PT Bank and CaixaBank 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 CaixaBank. Check out your portfolio center. Please also check ongoing floating volatility patterns of PT Bank and CaixaBank.

Diversification Opportunities for PT Bank and CaixaBank

-0.77

Correlation Coefficient

PT Bank  CaixaBank

Pay attention - limited upside

The 3 months correlation between PBCRF and CaixaBank is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding PT Bank Central and CaixaBank SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CaixaBank SA 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 CaixaBank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CaixaBank SA has no effect on the direction of PT Bank i.e., PT Bank and CaixaBank go up and down completely randomly.

Pair Corralation between PT Bank and CaixaBank

Assuming the 90 days horizon PT Bank Central is expected to under-perform the CaixaBank. In addition to that, PT Bank is 1.36 times more volatile than CaixaBank SA. It trades about -0.01 of its total potential returns per unit of risk. CaixaBank SA is currently generating about 0.18 per unit of volatility. If you would invest  546.00  in CaixaBank SA on December 30, 2024 and sell it today you would earn a total of  243.00  from holding CaixaBank SA or generate 44.51% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	96.77%
Values	Daily Returns

PT Bank Central  vs.  CaixaBank SA

PT Bank Central

Risk-Adjusted Performance

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 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.

CaixaBank SA

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in CaixaBank SA are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, CaixaBank reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with PT Bank and CaixaBank

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

The idea behind PT Bank Central and CaixaBank SA 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.

Check out your portfolio center.

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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.