Correlation Between PT Bank and SwissCom

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

Diversification Opportunities for PT Bank and SwissCom

0.8

Correlation Coefficient

PT Bank  SwissCom

Very poor diversification

The 3 months correlation between PBCRF and SwissCom is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding PT Bank Central and SwissCom AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SwissCom AG 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 SwissCom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SwissCom AG has no effect on the direction of PT Bank i.e., PT Bank and SwissCom go up and down completely randomly.

Pair Corralation between PT Bank and SwissCom

Assuming the 90 days horizon PT Bank Central is expected to generate 3.81 times more return on investment than SwissCom. However, PT Bank is 3.81 times more volatile than SwissCom AG. It trades about 0.02 of its potential returns per unit of risk. SwissCom AG is currently generating about 0.02 per unit of risk. If you would invest  54.00  in PT Bank Central on September 27, 2024 and sell it today you would earn a total of  6.00  from holding PT Bank Central or generate 11.11% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.32%
Values	Daily Returns

PT Bank Central  vs.  SwissCom AG

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

SwissCom AG

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with PT Bank and SwissCom

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

The idea behind PT Bank Central and SwissCom AG 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.