Correlation Between PT Bank and Linde Plc

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

Diversification Opportunities for PT Bank and Linde Plc

0.56

Correlation Coefficient

PT Bank  Linde Plc

Very weak diversification

The 3 months correlation between PQ9 and Linde is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding PT Bank Mandiri and Linde plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Linde plc 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 Linde Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Linde plc has no effect on the direction of PT Bank i.e., PT Bank and Linde Plc go up and down completely randomly.

Pair Corralation between PT Bank and Linde Plc

Assuming the 90 days horizon PT Bank Mandiri is expected to under-perform the Linde Plc. In addition to that, PT Bank is 5.33 times more volatile than Linde plc. It trades about -0.02 of its total potential returns per unit of risk. Linde plc is currently generating about -0.04 per unit of volatility. If you would invest  43,620  in Linde plc on October 24, 2024 and sell it today you would lose (1,120) from holding Linde plc or give up 2.57% of portfolio value over 90 days.

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

PT Bank Mandiri  vs.  Linde plc

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 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.

Linde plc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Linde plc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Linde Plc is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with PT Bank and Linde Plc

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

The idea behind PT Bank Mandiri and Linde plc 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 Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..