Correlation Between PT Bank and Polski Koncern

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

Diversification Opportunities for PT Bank and Polski Koncern

0.72

Correlation Coefficient

PT Bank  Polski Koncern

Poor diversification

The 3 months correlation between PQ9 and Polski is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding PT Bank Mandiri and Polski Koncern Naftowy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Polski Koncern Naftowy 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 Polski Koncern. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Polski Koncern Naftowy has no effect on the direction of PT Bank i.e., PT Bank and Polski Koncern go up and down completely randomly.

Pair Corralation between PT Bank and Polski Koncern

Assuming the 90 days horizon PT Bank Mandiri is expected to under-perform the Polski Koncern. In addition to that, PT Bank is 2.88 times more volatile than Polski Koncern Naftowy. It trades about -0.06 of its total potential returns per unit of risk. Polski Koncern Naftowy is currently generating about -0.17 per unit of volatility. If you would invest  1,208  in Polski Koncern Naftowy on September 23, 2024 and sell it today you would lose (95.00) from holding Polski Koncern Naftowy or give up 7.86% of portfolio value over 90 days.

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

PT Bank Mandiri  vs.  Polski Koncern Naftowy

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 fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Polski Koncern Naftowy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Polski Koncern Naftowy has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with PT Bank and Polski Koncern

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

The idea behind PT Bank Mandiri and Polski Koncern Naftowy 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.