Correlation Between PT Bank and Loews Corp

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

Diversification Opportunities for PT Bank and Loews Corp

-0.71

Correlation Coefficient

PT Bank  Loews Corp

Pay attention - limited upside

The 3 months correlation between PQ9 and Loews is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding PT Bank Mandiri and Loews Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Loews Corp 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 Loews Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Loews Corp has no effect on the direction of PT Bank i.e., PT Bank and Loews Corp go up and down completely randomly.

Pair Corralation between PT Bank and Loews Corp

Assuming the 90 days horizon PT Bank Mandiri is expected to under-perform the Loews Corp. In addition to that, PT Bank is 3.24 times more volatile than Loews Corp. It trades about -0.03 of its total potential returns per unit of risk. Loews Corp is currently generating about 0.18 per unit of volatility. If you would invest  7,095  in Loews Corp on October 10, 2024 and sell it today you would earn a total of  1,055  from holding Loews Corp or generate 14.87% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.31%
Values	Daily Returns

PT Bank Mandiri  vs.  Loews Corp

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 uncertain 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.

Loews Corp

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Loews Corp are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, Loews Corp exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with PT Bank and Loews Corp

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

The idea behind PT Bank Mandiri and Loews Corp 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..