Correlation Between PT Bank and Martin Marietta

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

Diversification Opportunities for PT Bank and Martin Marietta

0.21

Correlation Coefficient

PT Bank  Martin Marietta

Modest diversification

The 3 months correlation between PQ9 and Martin is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding PT Bank Mandiri and Martin Marietta Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Martin Marietta Materials 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 Martin Marietta. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Martin Marietta Materials has no effect on the direction of PT Bank i.e., PT Bank and Martin Marietta go up and down completely randomly.

Pair Corralation between PT Bank and Martin Marietta

Assuming the 90 days horizon PT Bank Mandiri is expected to generate 2.98 times more return on investment than Martin Marietta. However, PT Bank is 2.98 times more volatile than Martin Marietta Materials. It trades about 0.03 of its potential returns per unit of risk. Martin Marietta Materials is currently generating about 0.07 per unit of risk. If you would invest  30.00  in PT Bank Mandiri on October 20, 2024 and sell it today you would earn a total of  4.00  from holding PT Bank Mandiri or generate 13.33% return on investment over 90 days.

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

PT Bank Mandiri  vs.  Martin Marietta Materials

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.

Martin Marietta Materials

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Martin Marietta Materials has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Martin Marietta is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with PT Bank and Martin Marietta

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

The idea behind PT Bank Mandiri and Martin Marietta Materials 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.