Correlation Between PT Bank and Loyalty Ventures

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

Diversification Opportunities for PT Bank and Loyalty Ventures

0.74

Correlation Coefficient

PT Bank  Loyalty Ventures

Poor diversification

The 3 months correlation between PBCRF and Loyalty is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding PT Bank Central and Loyalty Ventures in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Loyalty Ventures 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 Loyalty Ventures. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Loyalty Ventures has no effect on the direction of PT Bank i.e., PT Bank and Loyalty Ventures go up and down completely randomly.

Pair Corralation between PT Bank and Loyalty Ventures

Assuming the 90 days horizon PT Bank Central is expected to generate 0.1 times more return on investment than Loyalty Ventures. However, PT Bank Central is 10.48 times less risky than Loyalty Ventures. It trades about 0.03 of its potential returns per unit of risk. Loyalty Ventures is currently generating about -0.16 per unit of risk. If you would invest  50.00  in PT Bank Central on October 5, 2024 and sell it today you would earn a total of  7.00  from holding PT Bank Central or generate 14.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	5.61%
Values	Daily Returns

PT Bank Central  vs.  Loyalty Ventures

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.

Loyalty Ventures

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with PT Bank and Loyalty Ventures

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

The idea behind PT Bank Central and Loyalty Ventures 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..