Correlation Between PT Bank and SIDETRADE

Can any of the company-specific risk be diversified away by investing in both PT Bank and SIDETRADE 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 SIDETRADE 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 SIDETRADE EO 1, you can compare the effects of market volatilities on PT Bank and SIDETRADE 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 SIDETRADE. Check out your portfolio center. Please also check ongoing floating volatility patterns of PT Bank and SIDETRADE.

Diversification Opportunities for PT Bank and SIDETRADE

-0.63

Correlation Coefficient

PT Bank  SIDETRADE

Excellent diversification

The 3 months correlation between PQ9 and SIDETRADE is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding PT Bank Mandiri and SIDETRADE EO 1 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SIDETRADE EO 1 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 SIDETRADE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SIDETRADE EO 1 has no effect on the direction of PT Bank i.e., PT Bank and SIDETRADE go up and down completely randomly.

Pair Corralation between PT Bank and SIDETRADE

Assuming the 90 days horizon PT Bank Mandiri is expected to under-perform the SIDETRADE. In addition to that, PT Bank is 2.58 times more volatile than SIDETRADE EO 1. It trades about -0.04 of its total potential returns per unit of risk. SIDETRADE EO 1 is currently generating about 0.05 per unit of volatility. If you would invest  22,000  in SIDETRADE EO 1 on December 29, 2024 and sell it today you would earn a total of  1,400  from holding SIDETRADE EO 1 or generate 6.36% return on investment over 90 days.

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

PT Bank Mandiri  vs.  SIDETRADE EO 1

PT Bank Mandiri

Risk-Adjusted Performance

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 April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

SIDETRADE EO 1

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in SIDETRADE EO 1 are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, SIDETRADE may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with PT Bank and SIDETRADE

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

The idea behind PT Bank Mandiri and SIDETRADE EO 1 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.