Correlation Between PT Bank and Tokyu REIT

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

Diversification Opportunities for PT Bank and Tokyu REIT

-0.64

Correlation Coefficient

PT Bank  Tokyu REIT

Excellent diversification

The 3 months correlation between PBCRF and Tokyu is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding PT Bank Central and Tokyu REIT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tokyu REIT 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 Tokyu REIT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tokyu REIT has no effect on the direction of PT Bank i.e., PT Bank and Tokyu REIT go up and down completely randomly.

Pair Corralation between PT Bank and Tokyu REIT

Assuming the 90 days horizon PT Bank Central is expected to generate 0.17 times more return on investment than Tokyu REIT. However, PT Bank Central is 5.73 times less risky than Tokyu REIT. It trades about 0.03 of its potential returns per unit of risk. Tokyu REIT is currently generating about -0.14 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 Against
Strength	Weak
Accuracy	10.49%
Values	Daily Returns

PT Bank Central  vs.  Tokyu REIT

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.

Tokyu REIT

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tokyu REIT has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Tokyu REIT is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with PT Bank and Tokyu REIT

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

The idea behind PT Bank Central and Tokyu REIT 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.