Correlation Between PT Bank and Knorr Bremse

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

Diversification Opportunities for PT Bank and Knorr Bremse

0.77

Correlation Coefficient

PT Bank  Knorr Bremse

Poor diversification

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

Pair Corralation between PT Bank and Knorr Bremse

Assuming the 90 days horizon PT Bank Central is expected to generate 2.56 times more return on investment than Knorr Bremse. However, PT Bank is 2.56 times more volatile than Knorr Bremse Aktiengesellschaft. It trades about 0.02 of its potential returns per unit of risk. Knorr Bremse Aktiengesellschaft is currently generating about -0.15 per unit of risk. If you would invest  61.00  in PT Bank Central on October 8, 2024 and sell it today you would earn a total of  0.00  from holding PT Bank Central or generate 0.0% return on investment over 90 days.

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

PT Bank Central  vs.  Knorr Bremse Aktiengesellschaf

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 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.

Knorr Bremse Aktieng

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Knorr Bremse Aktiengesellschaft has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with PT Bank and Knorr Bremse

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

The idea behind PT Bank Central and Knorr Bremse Aktiengesellschaft 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.