Correlation Between PT Bank and Netcall PLC

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

Diversification Opportunities for PT Bank and Netcall PLC

-0.44

Correlation Coefficient

PT Bank  Netcall PLC

Very good diversification

The 3 months correlation between PQ9 and Netcall is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding PT Bank Mandiri and Netcall PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Netcall 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 Netcall PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Netcall PLC has no effect on the direction of PT Bank i.e., PT Bank and Netcall PLC go up and down completely randomly.

Pair Corralation between PT Bank and Netcall PLC

Assuming the 90 days horizon PT Bank Mandiri is expected to under-perform the Netcall PLC. But the stock apears to be less risky and, when comparing its historical volatility, PT Bank Mandiri is 1.04 times less risky than Netcall PLC. The stock trades about -0.03 of its potential returns per unit of risk. The Netcall PLC is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  99.00  in Netcall PLC on October 4, 2024 and sell it today you would earn a total of  20.00  from holding Netcall PLC or generate 20.2% return on investment over 90 days.

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

PT Bank Mandiri  vs.  Netcall 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 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.

Netcall PLC

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Netcall PLC are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Netcall PLC unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with PT Bank and Netcall PLC

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

The idea behind PT Bank Mandiri and Netcall 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 Global Correlations module to find global opportunities by holding instruments from different markets.