Correlation Between PT Bank and SANUWAVE Health

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

Diversification Opportunities for PT Bank and SANUWAVE Health

-0.5

Correlation Coefficient

PT Bank  SANUWAVE Health

Very good diversification

The 3 months correlation between PBCRF and SANUWAVE is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding PT Bank Central and SANUWAVE Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SANUWAVE Health 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 SANUWAVE Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SANUWAVE Health has no effect on the direction of PT Bank i.e., PT Bank and SANUWAVE Health go up and down completely randomly.

Pair Corralation between PT Bank and SANUWAVE Health

Assuming the 90 days horizon PT Bank Central is expected to under-perform the SANUWAVE Health. In addition to that, PT Bank is 2.25 times more volatile than SANUWAVE Health. It trades about -0.05 of its total potential returns per unit of risk. SANUWAVE Health is currently generating about 0.06 per unit of volatility. If you would invest  2,733  in SANUWAVE Health on December 5, 2024 and sell it today you would earn a total of  77.00  from holding SANUWAVE Health or generate 2.82% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

PT Bank Central  vs.  SANUWAVE Health

PT Bank Central

Risk-Adjusted Performance

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

SANUWAVE Health

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in SANUWAVE Health are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, SANUWAVE Health showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with PT Bank and SANUWAVE Health

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

The idea behind PT Bank Central and SANUWAVE Health 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.