Correlation Between PT Bank and CLP Holdings

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

Diversification Opportunities for PT Bank and CLP Holdings

0.02

Correlation Coefficient

PT Bank  CLP Holdings

Significant diversification

The 3 months correlation between PBCRF and CLP is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding PT Bank Central and CLP Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CLP Holdings 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 CLP Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CLP Holdings has no effect on the direction of PT Bank i.e., PT Bank and CLP Holdings go up and down completely randomly.

Pair Corralation between PT Bank and CLP Holdings

Assuming the 90 days horizon PT Bank Central is expected to under-perform the CLP Holdings. In addition to that, PT Bank is 5.29 times more volatile than CLP Holdings. It trades about -0.04 of its total potential returns per unit of risk. CLP Holdings is currently generating about 0.02 per unit of volatility. If you would invest  811.00  in CLP Holdings on December 19, 2024 and sell it today you would earn a total of  8.00  from holding CLP Holdings or generate 0.99% return on investment over 90 days.

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

PT Bank Central  vs.  CLP Holdings

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 weak performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

CLP Holdings

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in CLP Holdings are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong technical indicators, CLP Holdings is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with PT Bank and CLP Holdings

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

The idea behind PT Bank Central and CLP Holdings 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 CEOs Directory module to screen CEOs from public companies around the world.