Correlation Between PT Bank and Bloom Energy

Can any of the company-specific risk be diversified away by investing in both PT Bank and Bloom Energy 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 Bloom Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between PT Bank Mandiri and Bloom Energy, you can compare the effects of market volatilities on PT Bank and Bloom Energy 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 Bloom Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of PT Bank and Bloom Energy.

Diversification Opportunities for PT Bank and Bloom Energy

-0.76

Correlation Coefficient

PT Bank  Bloom Energy

Pay attention - limited upside

The 3 months correlation between PQ9 and Bloom is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding PT Bank Mandiri and Bloom Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bloom Energy 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 Mandiri are associated (or correlated) with Bloom Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bloom Energy has no effect on the direction of PT Bank i.e., PT Bank and Bloom Energy go up and down completely randomly.

Pair Corralation between PT Bank and Bloom Energy

Assuming the 90 days horizon PT Bank Mandiri is expected to generate 1.37 times more return on investment than Bloom Energy. However, PT Bank is 1.37 times more volatile than Bloom Energy. It trades about -0.06 of its potential returns per unit of risk. Bloom Energy is currently generating about -0.09 per unit of risk. If you would invest  36.00  in PT Bank Mandiri on September 23, 2024 and sell it today you would lose (4.00) from holding PT Bank Mandiri or give up 11.11% of portfolio value over 90 days.

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

PT Bank Mandiri  vs.  Bloom Energy

PT Bank Mandiri

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PT Bank Mandiri has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile 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.

Bloom Energy

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Bloom Energy are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Bloom Energy reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with PT Bank and Bloom Energy

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

The idea behind PT Bank Mandiri and Bloom Energy 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.

Check out your portfolio center.

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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.