Correlation Between PT Bank and Fortive

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

Diversification Opportunities for PT Bank and Fortive

-0.61

Correlation Coefficient

PT Bank  Fortive

Excellent diversification

The 3 months correlation between PQ9 and Fortive is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding PT Bank Mandiri and Fortive in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fortive 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 Fortive. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fortive has no effect on the direction of PT Bank i.e., PT Bank and Fortive go up and down completely randomly.

Pair Corralation between PT Bank and Fortive

Assuming the 90 days horizon PT Bank Mandiri is expected to under-perform the Fortive. In addition to that, PT Bank is 2.97 times more volatile than Fortive. It trades about -0.03 of its total potential returns per unit of risk. Fortive is currently generating about 0.14 per unit of volatility. If you would invest  6,619  in Fortive on September 5, 2024 and sell it today you would earn a total of  809.00  from holding Fortive or generate 12.22% 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.  Fortive

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 latest fragile 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.

Fortive

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Fortive are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Fortive may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with PT Bank and Fortive

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

The idea behind PT Bank Mandiri and Fortive 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.