Correlation Between PT Bank and SHUAA Partners

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

Diversification Opportunities for PT Bank and SHUAA Partners

-0.39

Correlation Coefficient

PT Bank  SHUAA Partners

Very good diversification

The 3 months correlation between PBCRF and SHUAA is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding PT Bank Central and SHUAA Partners Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SHUAA Partners Acqui 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 SHUAA Partners. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SHUAA Partners Acqui has no effect on the direction of PT Bank i.e., PT Bank and SHUAA Partners go up and down completely randomly.

Pair Corralation between PT Bank and SHUAA Partners

Assuming the 90 days horizon PT Bank Central is expected to generate 15.45 times more return on investment than SHUAA Partners. However, PT Bank is 15.45 times more volatile than SHUAA Partners Acquisition. It trades about 0.03 of its potential returns per unit of risk. SHUAA Partners Acquisition is currently generating about 0.11 per unit of risk. If you would invest  61.00  in PT Bank Central on August 31, 2024 and sell it today you would earn a total of  6.00  from holding PT Bank Central or generate 9.84% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	8.47%
Values	Daily Returns

PT Bank Central  vs.  SHUAA Partners Acquisition

PT Bank Central

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in PT Bank Central are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. 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.

SHUAA Partners Acqui

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SHUAA Partners Acquisition has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, SHUAA Partners is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with PT Bank and SHUAA Partners

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

The idea behind PT Bank Central and SHUAA Partners Acquisition 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.