Correlation Between PT Bank and Iochpe Maxion

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

Diversification Opportunities for PT Bank and Iochpe Maxion

-0.68

Correlation Coefficient

PT Bank  Iochpe Maxion

Excellent diversification

The 3 months correlation between PBCRF and Iochpe is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding PT Bank Central and Iochpe Maxion SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Iochpe Maxion 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 Iochpe Maxion. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Iochpe Maxion SA has no effect on the direction of PT Bank i.e., PT Bank and Iochpe Maxion go up and down completely randomly.

Pair Corralation between PT Bank and Iochpe Maxion

If you would invest  100.00  in Iochpe Maxion SA on October 10, 2024 and sell it today you would earn a total of  0.00  from holding Iochpe Maxion SA or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	5.0%
Values	Daily Returns

PT Bank Central  vs.  Iochpe Maxion SA

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 fragile 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.

Iochpe Maxion SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Iochpe Maxion SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong forward-looking indicators, Iochpe Maxion is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with PT Bank and Iochpe Maxion

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

The idea behind PT Bank Central and Iochpe Maxion 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.

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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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.