Correlation Between PT Bank and Patterson Companies

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

Diversification Opportunities for PT Bank and Patterson Companies

-0.71
  Correlation Coefficient

Pay attention - limited upside

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

Pair Corralation between PT Bank and Patterson Companies

Assuming the 90 days horizon PT Bank Mandiri is expected to generate 1.79 times more return on investment than Patterson Companies. However, PT Bank is 1.79 times more volatile than Patterson Companies. It trades about 0.03 of its potential returns per unit of risk. Patterson Companies is currently generating about 0.02 per unit of risk. If you would invest  29.00  in PT Bank Mandiri on October 23, 2024 and sell it today you would earn a total of  5.00  from holding PT Bank Mandiri or generate 17.24% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

PT Bank Mandiri  vs.  Patterson Companies

 Performance 
       Timeline  
PT Bank Mandiri 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
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.
Patterson Companies 

Risk-Adjusted Performance

12 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Patterson Companies are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, Patterson Companies exhibited solid returns over the last few months and may actually be approaching a breakup point.

PT Bank and Patterson Companies Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with PT Bank and Patterson Companies

The main advantage of trading using opposite PT Bank and Patterson Companies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PT Bank position performs unexpectedly, Patterson Companies 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 Patterson Companies will offset losses from the drop in Patterson Companies' long position.
The idea behind PT Bank Mandiri and Patterson Companies 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..

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