Correlation Between PT Bank and Sensor Technologies

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

Diversification Opportunities for PT Bank and Sensor Technologies

-0.35

Correlation Coefficient

PT Bank  Sensor Technologies

Very good diversification

The 3 months correlation between PBCRF and Sensor is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding PT Bank Central and Sensor Technologies Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sensor Technologies Corp 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 Sensor Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sensor Technologies Corp has no effect on the direction of PT Bank i.e., PT Bank and Sensor Technologies go up and down completely randomly.

Pair Corralation between PT Bank and Sensor Technologies

Assuming the 90 days horizon PT Bank Central is expected to generate 0.41 times more return on investment than Sensor Technologies. However, PT Bank Central is 2.43 times less risky than Sensor Technologies. It trades about 0.02 of its potential returns per unit of risk. Sensor Technologies Corp is currently generating about 0.0 per unit of risk. If you would invest  60.00  in PT Bank Central on October 7, 2024 and sell it today you would earn a total of  1.00  from holding PT Bank Central or generate 1.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	97.38%
Values	Daily Returns

PT Bank Central  vs.  Sensor Technologies Corp

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 latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Sensor Technologies Corp

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Sensor Technologies Corp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain forward indicators, Sensor Technologies reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with PT Bank and Sensor Technologies

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

The idea behind PT Bank Central and Sensor Technologies Corp 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.